On December 16, the Consumer Financial Protection Bureau released a consent order with EZCORP, Inc., ordering the small-dollar lender and its wholly-owned subsidiaries to refund $7.5 million to 93,000 consumers and pay $3 million in penalties for illegal debt collection practices.
EZCORP, a financial services company headquartered in Austin, Texas, provides high-cost, short-term, unsecured loans, including payday and installment loans, in 15 states and from more than 500 storefronts. According to the consent order, EZCORP violated the Electronic Fund Transfer Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibition against unfair and deceptive acts or practices. EZCORP's specific unlawful debt collection methods included in-person visits to consumers' homes and places of employment, illegally contacting third parties about consumers' debts, calling consumers at their workplaces despite being told to stop, and falsely threatening legal action.
In addition to the steep monetary penalties, EZCORP was also ordered to stop collection of outstanding payday and installment loans owed by approximately 130,000 consumers, expected to total tens of millions of dollars in debt.
Relying on the EZCORP enforcement action, the CFPB also released a related bulletin on December 16, warning debt collectors that they run a heightened risk of committing unfair acts or practices and violating the Fair Debt Collection Practices Act when going to a consumer's home or workplace to collect a debt. The bulletin asserts that in-person collections may be deemed harassment and cause substantial injury to consumers, including reputational harm if third parties learn that the consumer has debts in collection.
In a press release, CFPB Director Richard Cordray stated, "Borrowers should be treated with common decency. This action and this bulletin are a reminder that we will not tolerate illegal debt collection practices."
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