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From Banking and Finance Law Daily, December 19, 2016

CFPB brings the axe down on payday lender Moneytree for misleading consumers

By Stephanie K. Mann, J.D.

The Consumer Financial Protection Bureau has entered into a consent order and stipulation with Moneytree, Inc., a financial services company that offers payday loans and check-cashing services, for misleading consumers with deceptive online advertisements and collections letters. According to the bureau, the company also made unauthorized electronic transfers from consumers’ bank accounts. The CFPB has ordered the company to cease its illegal conduct, provide $255,000 in refunds to consumers, and pay a civil penalty of $250,000.

"Consumers deserve honesty and transparency from the financial institutions they rely on," said CFPB Director Richard Cordray. "Moneytree’s practices meant consumers were making decisions based on false and deceptive information, and today’s action will give the company’s customers the redress they are owed."

Moneytree, Inc., is a financial services company based in Seattle, Wash., that offers payday loans, check-cashing, and other services to consumers. After conducting multiple supervisory examinations of Moneytree’s lending, marketing, and collections activities, the CFPB has identified significant weaknesses in the company’s compliance-management system in each of them. The Consent Order states that the company failed to address those weaknesses and deceived consumers about the price of check-cashing services, made false threats of vehicle repossession when collecting overdue unsecured loans, and withdrew funds from consumers’ accounts without written authorization. Specifically, the CFPB found that Moneytree:

  • Used deceptive online ads: In early 2015, Moneytree ran advertisements online offering to cash consumers’ tax refund checks for "1.99." The actual fee for the service was 1.99 percent of the amount of the check cashed, rather than $1.99, as the company’s advertisements implied. Consumers were required to visit one of Moneytree’s physical branches to take advantage of the advertisement’s offer, which appeared online tens of thousands of times.
  • Deceptively told consumers their vehicles could be repossessed: From late 2014 through early 2015, Moneytree mailed letters to hundreds of consumers indicating that their vehicles could be repossessed if they did not make past-due payments on their installment loans. But none of these consumers had loans secured by their vehicles, and Moneytree had no right or ability to repossess them.
  • Withdrew money from consumers’ accounts without authorization: Moneytree failed, in over 700 instances, to obtain preauthorization from consumers for withdrawals from their bank accounts, in violation of federal law.

Moneytree stipulated to the CFPB’s findings.

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