The Consumer Financial Protection Bureau last week filed a federal lawsuit against All American Check Cashing, a payday lender with dozens of locations in the south. The bureau alleges that All American and its sole owner used “deceptive” tactics against consumers. The CFPB asks the court to compel All American to repay customers who have been harmed and to pay a civil penalty. The complaint can be found here.
The CFPB complaint alleges that All American refused to tell consumers how much they would be charged for their payday loans. According to the complaint, All American instructs its employees to hide the check-cashing fees by counting out the money over the fee disclosure on the receipt and removing the “receipt and check as quickly as possible.” All American’s policies explicitly forbid employees from disclosing the check-cashing fee to consumers, even when directly asked. A training presentation for new employees instructs them to “NEVER TELL THE CUSTOMER THE FEE.” Employees are directed to say they do not know what the fee will be, and to deflect consumers’ questions with small talk and irrelevant information so that “they are overwhelmed with info.”
In addition, the complaint details how All American sought to trap consumers who change their minds. When consumers ask to cancel or reverse a check cashing transaction after learning the fee, All American employees sometimes lied and said that the transaction could not be canceled, even when that was not the case. All American employees also falsely told consumers that it would take a long time to reverse a transaction. In some cases All American’s procedures actually do make it difficult or impossible for the consumer to cash checks elsewhere. For example, employees sometimes apply a stamp to the back of the check, such as “For Deposit Only: All American Check Cashing Inc,” effectively locking the consumer into the transaction.
The action is separate from an enforcement action the Mississippi Department of Banking and Consumer Finance has taken against All American. The state alleges All American violated the state’s loan rollover laws. With a rollover, the borrower pays fees on the first loan with money from a new loan. In ordering revocation of the licenses for All American’s Mississippi stores and payment of a $3 million penalty, the Banking Department said it found 1,600 rollover violations involving 6,500 customers. In addition, the investigation turned up 692 violations involving refusals to give customers refunds All American Check Cashing owed them, regulators say. All American, they said, took “overt” actions to keep customers from learning they had refunds coming.