The Consumer Financial Protection Bureau filed a lawsuit Wednesday charging All American Check Cashing with deceiving check-cashing and loan customers at its 43 stores in Mississippi and at locations in Louisiana and Alabama.
The CFPB alleges that the Madison, Miss.-based check casher and payday lender tried to keep consumers from learning how much they would be charged to cash a check, made false statements about the benefits of its payday loans and failed to provide refunds to consumers who made overpayments.
The CFPB’s lawsuit seeks to end All American’s unlawful practices, obtain monetary relief for consumers and impose penalties against the company and owner Michael Gray. The complaint also names Mid-State Finance Inc. (doing business as Thrifty Check Advance), which offers check cashing and payday loans in at least one store in Pearl, Miss.
The lawsuit was filed in the U.S. District Court Southern District of Mississippi Northern Division. Dale Danks Jr., an attorney for Gray, declined to comment. All American operates 50 stores in Mississippi, Alabama and Louisiana and collects more than $1 million in fees annually, the CFPB said. The complaint details how All American and Gray allegedly were instructed never to tell customers fees they were charged when cashing checks. All American charges a 3% fee for government-issued checks and a 5% fee for other checks. In Louisiana, the fee is 2% for government-issued checks and 5% for other checks.The CFPB’s lawsuit stated that Gray was "aware of the unlawful policies, procedures, and practices," and that he "promoted them, directed others to implement them, and personally created some of them." The complaint state that Gray received personal financial gain from the illegal practices.The CFPB's lawsuit is separate from action the Mississippi Department of Banking and Consumer Finance took against both the company and Gray. The banking department alleges All American violated the state’s loan rollover laws as a matter of company policy. With a rollover, the borrower pays fees on the first loan with money from a new loan.In revoking licenses for All American’s Mississippi stores and ordering a $3 million penalty, the banking department said it found 1,600 rollover violations involving 6,500 customers. The investigation also revealed 692 violations involving refusals to give customers refunds that All American Check Cashing owed them. All American, they say, took “overt" actions to keep customers from learning they had refunds coming.
Gray’s legal appeals have helped him avoid paying the $3 million state fine so far. He has also avoiding a shutdown of his stores through the legal appeals. Gray’s lawyers argue the Madison businessman and his company are victims of "government thuggery" and that the penalties are the result of a "vendetta against All American, orchestrated by one or more" employees of the state’s banking department.