Here’s your free compliance tip of the day: Don’t shred important consumer files, especially if the Consumer Financial Protection Bureau has just requested them as part of a routine exam.
This should seem obvious, but that’s exactly what one payday lender just got caught doing. The CFPB announced Wednesday its enforcement action against Cash America International, Inc. for – among other things - robo-signing court documents in debt collection lawsuits, as well as “carelessly [destroying] records relevant to the Bureau’s onsite compliance examination.” Now, the Bureau and Cash America have entered into a Consent Order which mandates that Cash America refund consumers and pay a fine (which amounts to a $19 million payout at the end of the day), as well as update its internal compliance systems.
According to a CFPB press release, “Cash America will develop and implement a comprehensive plan to improve its compliance with consumer financial protection laws, including the Military Lending Act.”
Specifically, the order gives Cash America 120 days to submit to the Bureau’s Regional Director a written compliance progress report that details the company’s compliance with the order and a copy of each Order Acknowledgement. And for the next three years, Cash America must notify the CFPB of any company changes that may impact its obligations to the Bureau.
The whole debacle underscores how close of an eye the Bureau plans to keep on debt collection, and that watch extends to all parties associated with accounts receivable management. In a call with reporters Wednesday, CFPB Director Richard Cordray said Cash America worked in broad strokes with Bureau officials to cancel the debt collection judgments it had improperly obtained, remove those judgments from consumers’ credit reports and stop any related ongoing litigation.
“This action should send several clear messages to everyone under the jurisdiction of the Consumer Bureau,” Cordray said. ”Robo-signing practices are illegal, wherever they occur, and they need to stop, period.”
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