The Consumer Financial Protection Bureau has ordered payday and pawn lender EZCorp Inc. to pay $10.5 million for alleged illegal debt collection tactics.
The consumer watchdog agency claimed in its order that the Austin, Tex.-based lender made illegal visits to consumers at their homes and workplaces, lied about consumers' rights and made unlawful electronic withdrawals that exposed consumers to bank fees, among other charges. The CFPB demanded that EZCorp refund $7.5 million to 93,000 consumers and pay another $3 million in fines to the CFPB's Civil Penalty Fund.
Additionally, the agency said that EZCorp must stop collecting remaining payday and installment loan debts from roughly 130,000 borrowers. EZCorp is also barred from attempting to collect future debts in person.
EZCorp confirmed that it reached the settlement with the CFPB, but did not admit guilt or deny any of the conclusions held in the consent order.
Additionally, the CFPB also issued a warning regarding illegal debt collection tactics, including in-person collections. The agency noted that lenders could break the law by going to a consumers' home or workplace to collect a debt. Such visits could be considered harassment and might reveal private financial information to third parties.
EZCorp stopped offering payday, installment and auto-title loans in the U.S. in July after the CFPB launched an investigation against the company, the firm noted in a Dec. 16 news release. Previously, the company did business under various trade names including EZMONEY Payday Loans, EZ Loan Services, EZ Payday Advance and EZPAWN Payday Loans.
EZCorp self-reported many of the issues and discontinued the allegedly illegal practices years ago, the lender claimed in the release.
"Given our decision in July 2015 to exit all payday, installment and auto title lending activities in the United States, we believe it is in the interests of all stakeholders to bring this issue to an amicable close," EZCorp Chief Executive Stuart Grimshaw said in the release. "Our focus will continue to be on responsibly and respectfully meeting our customers' need for access to cash when they want it through our pawn business lines."
EZCorp allegedly made in-person collection visits until at least Oct. 2013, during which the company would expose or risk exposing consumers' debts to third parties. As a result, consumers faced consequences including disciplinary actions or firing at their places of work. The company also reportedly would contact third parties such as work supervisors and landlords about borrowers' debts or call consumers at their workplaces even after being told to stop.
Additionally, EZCorp would threaten legal action, despite allegedly never taking consumers to court over debts owed. Other alleged illegal actions include lying about not conducting credit checks on applicants and telling borrowers that they could not stop electronic withdrawals or repay loans early.