CFPB fines payday lender Cash Tyme for overcharging customers

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The payday lender Cash Tyme overcharged customers and "harassed" their employers and family members to collect debts, according to a settlement with the Consumer Financial Protection Bureau announced Tuesday.

The lender, based in New Albany, Ind., collected at least $21,800 that consumers did not owe and that resulted in overdraft fees being charged against some consumers’ bank accounts, the CFPB said. The payday lender, which operates 37 stores in seven states, was ordered to pay a $100,000 fine to the CFPB but was not required to pay restitution to borrowers.

Cash Tyme's counsel Allen Denson said the company "had already voluntarily reimbursed consumers for the alleged overpayments." The case arose out of a CFPB examination, he said, and the company is "pleased to put this matter behind it."

The CFPB alleged that Cash Tyme engaged in numerous unfair and deceptive acts or practices from 2014 to 2017, including failing to implement processes to prevent unauthorized charges and repeatedly calling consumers’ employers and personal references to pressure the borrower to pay off a loan.

According to the consent order, the company also failed to accurately disclose the annual percentage rate of loans from 2014 to mid-2016, and systematically excluded a $1.00 payday loan database fee from its APR calculation on loans in Kentucky, in violation of the Truth in Lending Act and Regulation Z.

In addition, Cash Tyme failed to provide initial privacy notices to borrowers, collected private data from third-party references that were used to sell its payday loans, and advertised services such as check cashing that were not available, the bureau said.

The company is a unit of CMM LLC, which had $2.8 million in assets at the end of 2017, the CFPB said.

From 2014 to 2017, Cash Tyme disclosed or risked disclosing consumers’ delinquent debts to employers, supervisors and co-workers, the CFPB said.

The payday lender “harassed third parties who had no relationship” to the Cash Tyme, causing "them to incur lost work time or out-of-pocket costs,” the CFPB’s 39-page settlement stated. “In some instances [Cash Tyme] asked the third party to make a payment on the loan him or herself or sought to have the third party apply pressure on the borrower to make the payment.”

The company also engaged in deceptive acts by requiring borrowers to list phone numbers of their employer, supervisor and four personal references on a loan application, the CFPB said. The information was then used to try to sell payday loans to the third parties.

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Payday lending UDAAP Compliance Enforcement actions Debt collection CFPB