CFPB settles with short-term lender

The Consumer Financial Protection Bureau has settled with Cottonwood Financial, Ltd., over a number of consumer protection violations.

The Consumer Financial Protection Bureau has settled with Cottonwood Financial, Ltd., over a number of consumer protection violations.

The consent order requires Cottonwood Financial, which does business under the name Cash Store, to pay over $1.3 million in redress and penalties.

The CFPB found that in the course of marketing, servicing, and collecting on high-interest payday, auto-title, and unsecured consumer-installment loans, Cash Store violated the Consumer Financial Protection Act, Fair Credit Reporting Act, and Truth in Lending Act.

Specifically, Cash Store made deceptive representations in its television advertisements and telemarketing calls when promoting “50%-off” all of its loan fees when it did not in fact provide that discount, the bureau said. 

Secondly, Cash Store engaged in unfair practices by repeatedly calling consumers’ workplaces and references after being asked to stop and not for purposes of locating consumers, disclosing the delinquency of consumers’ debts to third parties or using tactics that risked such disclosure, and making excessive calls to consumers that aggravated, annoyed, and distressed consumers.

Cash Store also violated the FCRA by failing to maintain adequate policies and procedures concerning the accuracy and integrity of the information it furnished to consumer reporting agencies, potentially affecting about 20,000 consumer accounts, the CFPB said. 

Cash Store also violated TILA by failing to provide the annual percentage rate to consumers when they inquired over the phone about the cost of their loans.

The consent order requires $286,675.64 in redress be paid to over 1,200 borrowers to whom Cash Store falsely promised 50% off all fees. It also requires a civil money penalty of $1,100,000 to the CFPB’s Civil Penalty Fund. 

Cash Store is based in Irving, Texas, and owns and operates roughly 340 retail lending outlets in Idaho, Illinois, Michigan, New Mexico, Texas, Utah, and Wisconsin.

Fredrikson & Byron Law