Texas-based payday lender ACE Cash Express has agreed to pay $10 million to settle allegations by the federal Consumer Financial Protection Bureau that it used harassment and other illegal tactics to push borrowers into a cycle of debt.
Under the agreement, the company, one of the nation’s largest payday lenders, will pay $5 million in refunds to consumers and will also pay a $5 million fine, the bureau said Thursday.
“ACE used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” bureau Director Richard Cordray said in a statement. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.”
Supporters of payday lending say it offers a needed service to consumers who have few options for short-term loans. Critics say the companies prey on struggling people by charging high fees and trapping borrowers in a cycle of debt.
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