"ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt," said CFPB Director
ACE is a financial services company headquartered in
Payday loans are often described as a way for consumers to bridge a cash-flow shortage between paychecks or other income. They are usually expensive, small-dollar loans that must be repaid in full in a short period of time. A
Illegal Debt Collection Threats and Harassment
* Threatening to sue or criminally prosecute: ACE debt collectors led consumers to believe that they would be sued or subject to criminal prosecution if they did not make payments. Collectors would use legal jargon in calls to consumers, such as telling a consumer he could be subject to "immediate proceedings based on the law" even though ACE did not actually sue consumers or attempt to bring criminal charges against them for non-payment of debts.
* Threatening to charge extra fees and report consumers to credit reporting agencies: As a matter of corporate policy, ACE's debt collectors, whether in-house or third-party, cannot charge collection fees and cannot report non-payment to credit reporting agencies. The collectors, however, told consumers all of these would occur or were possible.
* Harassing consumers with collection calls: Some ACE in-house and third-party collectors abused and harassed consumers by making an excessive number of collection calls. In some of these cases, ACE repeatedly called the consumers' employers and relatives and shared the details of the debt.
Pressured into Payday Cycle of Debt
The Bureau found that ACE used these illegal debt collection tactics to create a false sense of urgency to lure overdue borrowers into payday debt traps. ACE would encourage overdue borrowers to temporarily pay off their loans and then quickly re-borrow from ACE. Even after consumers explained to ACE that they could not afford to repay the loan, ACE would continue to pressure them into taking on more debt. Borrowers would pay new fees each time they took out another payday loan from ACE. The Bureau found that ACE's creation of the false sense of urgency to get delinquent borrowers to take out more payday loans is abusive.
ACE's 2011 training manual has a graphic illustrating this cycle of debt. According to the graphic, consumers begin by applying to ACE for a loan, which ACE approves. Next, if the consumer "exhausts the cash and does not have the ability to pay," ACE "contacts the customer for payment or offers the option to refinance or extend the loan." Then, when the consumer "does not make a payment and the account enters collections," the cycle starts all over again--with the formerly overdue borrower applying for another payday loan.
The ACE cycle-of-debt training manual graphic is available at: http://files.consumerfinance.gov/f/201407_cfpb_graphic_ace-cash-express-loan-process.pdf
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the
* End illegal debt collection threats and harassment: The order requires ACE to ensure that it will not engage in unfair and deceptive collections practices. Those practices include, but are not limited to, disclosing debts to unauthorized third parties; directly contacting consumers who are represented by an attorney; and falsely threatening to sue consumers, report to credit bureaus, or add collection fees.
* Stop pressuring consumers into cycles of debt: ACE's collectors will no longer pressure delinquent borrowers to pay off a loan and then quickly take out a new loan from ACE. The Consent Order explicitly states that ACE may not use any abusive tactics.
* Pay a
The full text of the Bureau's Consent Order is available at: http://files.consumerfinance.gov/f/201407_cfpb_consent-order_ace-cash-express.pdf
* Go online at consumerfinance.gov/complaint
* Call the toll-free phone number at 1-855-411-
* Fax the
* Mail a letter to:
TNS 30TagarumaMar-140711-4794629 30TagarumaMar
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