WASHINGTON — The Consumer Financial Protection Bureau has reached a $10 million settlement with payday lender ACE Cash Express over allegations that it used illegal debt collection practices.

The settlement filed Thursday alleges ACE Cash essentially used threats against delinquent borrowers to compel them into taking out more payday loans, resulting in consumers falling into "debt traps." ACE has agreed to pay $5 million in refunds to affected consumers, and a $5 million penalty for the violations, without admitting wrongdoing.

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