The Consumer Financial Protection Bureau on Friday said Moneytree Inc. mislead consumers about the price of its check-cashing services, falsely threatened to repossess vehicles and withdrew funds from consumers' accounts without authorization.
Moneytree, a Seattle payday lender and check-casher, said in a press release that the allegations came from "unintended and isolated process errors" at the company, two of which were identified and self-corrected and a third was identified by a customer and corrected. The company agreed under a consent order to pay $255,000 in refunds to consumers and a civil money penalty of $250,000.
"Moneytree's practices meant consumers were making decisions based on false and deceptive information," CFPB Director Richard Cordray said in a press release. "Consumers deserve honesty and transparency from the financial institutions they rely on. Today's action will give the company's customers the redress they are owed."
The CFPB has conducted multiple supervisory exams of Moneytree's lending, marketing and collections practices. The bureau said it identified "significant weaknesses" in the company's compliance-management systems.
Specifically, Moneytree ran online advertisements that it would cash tax refund checks for $1.99, but the fee for the service was actually 1.99% of the amount of the check cashed - not $1.99 as the company's advertisements implied.
The company also told customers that their vehicles could be repossessed if they failed to make past-due payments on installment loans. Moneytree even referred to the loans in collection letters as auto title loans, when the loans were not secured by a vehicle and Moneytree "had no right or ability to repossess them," the CFPB said.
The company also failed more than 700 times to obtain pre-authorization from consumers to withdraw money from their bank accounts, a violation of federal law.
Moneytree's CEO Dennis Bassford said the company takes the matters seriously and has enhanced its procedures to avoid their recurrence.
"Moneytree has a 33-year history of good corporate citizenship and cooperation with state and federal regulators," Bassford said. "We are very proud of that history. Our customers are our singular focus at Moneytree."