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Short-Term Lender Pays Steep Price for Allegedly Engaging in Deceptive Marketing and Abusive Collection Practices

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with short-term lender Cottonwood Financial Ltd., d/b/a Cash Store (“Cash Store”) to resolve allegations that Cash Store engaged in deceptive advertising and marketing practices and predatory collection practices in violation of the Consumer Financial Protection Act, Fair Credit Reporting Act, and the Truth in Lending Act.
  • According to the CFPB, among other things, Cash Store, which offers high-interest payday, auto-title, and unsecured consumer-installment loans, allegedly promoted discounted fees that it did not offer in reality, made excessive calls to consumers, including to their work places, improperly disclosed debt delinquencies to third parties, and failed to ensure the accuracy and integrity of the information it furnished to credit reporting agencies.
  • Under the terms of the consent order, Cash Store is enjoined from engaging in deceptive marketing practices and harassing collection practices. Cash Store is also required to provide nearly $287,000 in redress to borrowers who were promised discounted fees and to pay a civil money penalty of $1.1 million to the CFPB’s Civil Penalty Fund.