The CFPB is showing that its enforcement actions are not limited to larger companies and that it will file actions in federal courts across the country. On May 11, 2016, it filed an enforcement action against Mississippi payday lender All American Check Cashing in the United States District Court for the Southern District of Mississippi. In its complaint, the CFPB alleged that all American took steps to hide its fee from customers, going so far as to train its employees to “NEVER TELL THE CUSTOMER THE FEE.” Further, the CFPB alleges that All American took steps to prevent customers who had changed their minds from cancelling transactions. According to the CFPB, these actions would constitute “unfair, deceptive, or abusive acts” under 12 U.S.C.A. ss 5531 and 5536, portions of the Consumer Financial Protection Act.
All American has previously appealed a $3 million penalty imposed by the Mississippi Department of Banking and Consumer Finance, which accused the payday lender of making 1,600 rollover violations – failing to ensure that one loan is not is not paid off from the proceeds of another loan – and failing to make 692 refunds owed to customers. Although All American has not yet responded to the CFPB’s complaint, it has previously denied wrongdoing in responding to Mississippi regulators.
This new action also shows that state enforcement actions can bring unwanted CFPB attention and that it is important to hire experienced counsel when such issues arise. It also illustrates that the CFPB has a special interest in payday lenders.