The Consumer Financial Protection Bureau (CFPB) has been on a bit of a tear in recent months. The bureau, with a mission to protect consumers from financial scams, recently set its aim on EZCORP, Inc. This company is a smaller-dollar lending company that has been charged with utilizing illegal debt collections tactics. The practices EZCORP used are alleged to include making illegal, unsolicited visits to people at their jobs and at their homes, threatening legal action, lying to consumers about their rights and making consumers liable for bank fees by way of unlawful withdrawals from consumers’ accounts.
The CFPB ordered this company to refund over 7 million dollars to 93,000 people. The lender must also pay penalties that add up to $3 million and they are being forced to put a stop to the collection of remaining loans made to nearly 130,000 consumers. The order also prohibits EZCORP from making any in person collections in the future. Also, the CFPB published an official warning to the entire industry with regards to collecting debts at places of employment or at consumers’ homes.
Richard Cordray, the current director of the Consumer Financial Protection Bureau said, “People struggling to pay their bills should not also fear harassment, humiliation, or negative employment consequences because of debt collectors. Borrowers should be treated with common decency. This action and this bulletin are a reminder that we will not tolerate illegal debt collection practices.”
Until not all that long ago, EZCORP (with headquarters in Austin, Texas) and its related professional entities, gave high fee, short term loans that included both installment loans and payday advance loans to consumers. The company made loans in 15 states via more than 500 storefront/strip mall locations. The company used several different names for these locations, including “EZ Loan Services,” “EZ Payday Advance,” and “EZPAWN Payday Loans.” The Consumer Financial Protection Bureau begin investigating EZCORP back in July of 2015. After the investigation began, the lending company made an announcement about cutting off all payday, auto title and installment loan services in the US.
It was discovered during the investigation that EZCORP was in the habit of using unlawful collections practices. They would often show up at the homes and workplaces of consumers, and would expose consumer debts to third party collectors. The lender allegedly made false threats of legal action and even made unauthorized electronic withdrawals from consumer bank accounts. According to the CFPB, these actions represent a violation of the Electronic Fund Transfer Act, along with violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Dodd-Frank Act authorizes the Consumer Financial Protection Bureau to take legal action against any individuals or organizations that use abusive, unfair or deceptive practices, or any company that directly violates federal consumer laws. Now that the investigation is wrapped up and the CFPB orders have been laid out, EZCORP’s future is more than likely up in the air. While it is true that payday lenders make a profit from their businesses, it is anyone’s guess as to whether the company will be able to bounce back from having to pay what amounts to a 10 million dollar fine. And if they do bounce back, the company would be best suited to avoid any perception of deceptive/abusive/illegal practices in the future in order to stay out of the crosshairs of the Consumer Financial Protection Bureau. Say what you will about the CFPB, but once they decide to take action, they most definitely do not back down.