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Friday, July 11, 2014

CFPB Fines Payday Lender Over “Abusive” Practices

The CFPB has announced that it is resolving an investigation and entering an order against one of the nation’s largest payday lenders for inducing payday borrowers into a cycle of debt. The CFPB believes the payday lender used illegal debt collection tactics – including harassment and false threats of lawsuits, or criminal prosecution – to bully overdue borrowers with a demonstrated inability to repay their existing loans into taking out new payday loans with expensive fees. Under the terms of the order, the payday lender will pay $10 million in restitution and penalties to address the conduct at issue.

Under the Dodd-Frank Act the CFPB was granted authority to supervise payday lenders—the first federal agency granted such powers. This announcement was one of the first of a handful of case where the CFPB used its new authority to prohibit “abusive” practices.

Read the consent order.

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