The Consumer Financial Protection Bureau, which began supervising the payday loan industry in January 2012, has begun rein in abuse, producing a report critical of the industry and requiring two payday businesses to provide refunds and pay million-dollar fines. The bureau also is drafting rules that could provide further protections for consumers.
The bureau, established by the Dodd Frank Act of 2010, began operating in July 2011. The bureau supervises consumer financial companies and can enforce and write rules to restrict unfair, deceptive or abusive practices. Consumers can send complaints about financial services to the bureau.
Following a review of debt collection practices at ACE Cash Express, a payday loan company, the bureau announced a July 10 enforcement action requiring the company to pay $5 million in refunds and a $5 million penalty.
Between 2011 and 2012 ACE used illegal debt collection tactics including harassment and threatening lawsuits or additional fees to pressure borrowers to pay off overdue balances by taking out new loans, according to the bureau’s findings. Only the period between 2011 and 2012 was studied.
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