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Prepared Remarks of CFPB Director Richard Cordray at the ACE Cash Express Enforcement Action Press Call

Thank you for joining us on today’s call. Today we are announcing that we have resolved an investigation and are entering an order against one of the nation’s largest payday lenders, ACE Cash Express, for inducing payday borrowers into a cycle of debt. We believe ACE 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. These kinds of predatory tactics are appalling, and under the terms of the order, ACE will pay $10 million in restitution and penalties to address the conduct at issue.

Today’s order results from a CFPB examination, which led to an enforcement investigation. The Bureau found that ACE’s debt collectors, both in-house and third-party, falsely threatened to sue or criminally prosecute consumers, to report them to credit bureaus, and to add fees to their debts. Indeed, ACE’s own training manuals directed debt collectors to “create a sense of urgency” when contacting delinquent borrowers.

ACE was relentlessly overzealous in its pursuit of overdue consumers. Some collectors would press consumers with an excessive amount of calls to abuse or harass them. Some continued calling consumers after being notified that they were represented by attorneys or not permitted to receive calls at work. We also found that ACE collectors were repeatedly calling consumers’ employers and relatives – and improperly sharing the details of the debt. ACE also made false threats about what would happen once it referred consumers’ debts to third party collectors. For example, collectors said things like these third-party collectors’ “actions are unlimited.”

We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps. Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.

ACE would then relieve the pressure by encouraging these overdue borrowers to pay off their original loan only temporarily while getting them to take out yet another payday loan. Each time, ACE would collect another round of expensive fees, and the borrower would sink even deeper into debt. This vicious cycle of debt drained hard-earned dollars from cash-strapped consumers, who had few if any options available to fight back.

At the Bureau, we remain concerned that short-term payday loans can turn into long-term debt traps that leave consumers worse off. A study released this spring found that four out of five payday loans are rolled over or renewed within two weeks. It also found that most payday loans are made to borrowers who renew their loans so many times that they end up paying more in fees than the amount they originally borrowed.

So payday loans pose risks when they are not offered by responsible lenders. But this case shows that the real harm to consumers can be far greater than just the financial burdens. Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally. The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.

We will continue to do that by identifying and rooting out unfair and abusive practices in financial markets. The amount of restitution and the penalty imposed on ACE as a result of our action is a serious response to such practices. So today’s enforcement action is an important step in fulfilling our duty to ensure that consumers in the marketplace for payday loans are treated fairly and with respect. Thank you.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit