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.

"ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt," said CFPB Director Richard Cordray in a press release. "This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back. The CFPB was created to stand up for consumers and today we are taking action to put an end to this illegal, predatory behavior."

ACE Cash Express, based in Irving, Texas, said in a separate press release that the CFPB's allegations related "exclusively to some of Ace's collection practices prior to March 2012." (The CFPB began supervising payday lenders in January 2012.)

The payday lender said it had hired Deloitte Financial Advisory Services to independently review a random sample of its collection calls in response to the CFPB's concerns.

"Deloitte's review indicated that more than 96% of ACE's calls during the review period met relevant collections standards," the company said in the release. "Over the last two years, ACE has cooperated fully with the CFPB, implementing recommended compliance changes and enhancements and responding to requests for documents and information."

The CFPB said ACE Cash Express offers payday loans, check-cashing and other financial services online as well as in 1,500 retail storefronts nationwide.

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