Auto title lender slammed by CFPB order over finance charges

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The Consumer Financial Protection Bureau ordered a Tennessee payday and auto title lender to pay $2 million for engaging in an allegedly deceptive scheme to collect millions in additional finance charges from over 4,000 Mississippi borrowers.

The CFPB said Tuesday that Approved Cash Advance, in Cleveland, Tenn., sent loan disclosures to 4,129 Mississippi consumers stating legitimate finance charges, and then sent a separate document with fees that were more than five times higher.

The CFPB said a borrower who was supposed to pay $119.50 in finance charges as disclosed, would have paid $657.20 based on the subsequent fee schedule. When consumers were overcharged, the company then refused to issue refunds, retaining consumers’ overpayments for months and sometimes years, the bureau said. Refunds began in 2015 but were not completed until late 2017.

The company overcharged borrowers a total of $3.5 million in additional finance charges on auto title loans that already carried annual percentage rates of $290%, the agency said.

Approved Cash Advance, a unit of Main Street Personal Finance, did not respond to a request for comment. The company operates 156 stores in eight mostly Southern states.

The agency said the company's conduct during a one-year period starting in October 2014 violated Regulation Z, which implements the Truth in Lending Act. The company was ordered to pay $3.5 million in consumer redress, but the CFPB agreed to $2 million instead given what it called “Approved Cash’s demonstrated inability to pay.” The bureau also imposed a $1 civil money penalty.

In addition, the consent order states that Approved Cash also engaged in unfair debt collection tactics by “making numerous calls to consumers’ workplaces, references, and other third parties after being asked to stop, and improperly [disclosing] consumers’ debts to third parties or used tactics that risked such disclosure.”

The consent order prohibits Approved Cash from misrepresenting finance charges in its auto title pledge transactions, requires it to ensure that consumers with credit balances over $1 get timely refunds, and prohibits the company from engaging in the same unlawful debt collection practices.

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