Cleveland, OHThe crackdown on debt collector harassment continues, with efforts by the Consumer Financial Protection Bureau (CFPB) against those of ACE Cash Express (ACE) to foster the use of bullying and other tactics aimed at forcing consumers to take out loans they neither needed or wanted.
The Plain Dealer (7/11/14) reports that ACE is looking at a $10 million payout to settle allegations of bill collector harassment. There are various, legitimate processes available to a debt collector in order try and persuade a reluctant debtor to pay a debt. Harassment is not one of them, and it can often lead to a debt collector lawsuit.
That’s what happened here, in the face of allegations that ACE used bullying tactics against consumers. In this particular matter, ACE was accused of allowing third-party as well as in-house collectors to browbeat debtors with threats of a bill collector lawsuit or other criminal prosecution.
That’s a no-no in the eyes of the CFPB. Even worse, were alleged attempts to coerce debtors into taking out new loans, at a higher rate, in order to pay down the initial debt. In other words, piling debt onto debt. That kind of harassment is not allowed, either.
“ACE used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” said CFPB Director Richard Cordray, in announcing the settlement earlier this month.
The CFPB, in attempting to crack down on illegal debt collection tactics, is feverishly updating its policies and protocols to better reflect the online sources now available to consumers, and the manner in which unlicensed operators harass consumers with illegal, unfair and sometimes inhumane tactics that cause consumers needless anguish - not to mention harassing a debtor’s friends and family in equal measure.
ACE will pay $5 million in penalties for its illegal activity, as well as another $5 million to borrowers who may have been wronged in the harassment process. It was not articulated whether or not ACE was required to admit to any wrongdoing.
The target of the allegations in the bill collector lawsuit is based in Texas and was modeled after a “culture of coercion,” according to the CFPB’s Cordray. It has been reported that a training manual made available to trainees at the company references an expectation that “the customer exhausts the cash and does not have the ability to repay,” following issuance of the initial loan.
According to the manual, which was reported as being issued in 2011, once the debtor shows signs of an inability to pay, the next step identified in the cycle is to contact the debtor and attempt to issue a second loan at a higher rate of interest, in order to pay off the first loan. Should the debtor fail to respond, the file is then sent to collections, which in turn attempts to coerce the debtor into yet another loan.
It has been reported that various forms of illegal debt collector harassment were used to try and coerce debtors into either signing up for a new loan to cover the first or to pay off the first loan with money they didn’t have.
Many debtors are fighting back with a debt collector lawsuit. Other lawsuits are triggered through on-site investigations, which was the catalyst in this case for the CFPB’s action against ACE.
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