Tag Archives: payday loans

Austin, TX Payday Lender “EZCORP” Has 130,000 Loans Extinguished!

On December 16, 2015, the CFPB announced a consent decree with EZCORP, an Austin, Texas-based payday lender.  The consent decree included $7.5 million in redress to consumers, $3 million in fines, and the effective extinguishment of 130,000 payday loans.  In July of this year, EZCORP announced that they were exiting the consumer lending marketplace.

The consent decree alleged a number of UDAAP violations against EZCORP, including:

  1. Made in person “at home” debt collection attempts which “caused or had the potential to cause” unlawful third party disclosure, and often did so at inconvenient times.
  2. Made in person “at work” debt collection attempts which caused – or had the potential to cause – harm to the consumer’s reputation and/or work status.
  3. Called consumers at work when the consumer had notified EZCORP to stop contacting them at work or it was against the employer’s policy to contact them at work.  They also called references and landlords seeking to locate the consumer, disclosing – or risked disclosing – the call was an attempt to collect a debt.
  4. Threatened legal action against the consumer for non-payment, though they had neither the intent nor history of legal collection.
  5. Advertised to consumers that they extended loans without pulling credit reports, yet they often pulled credit reports without consumer consent.
  6. Frequently required as a condition of getting the loan that the consumer make payments via electronic withdrawals.  Under EFTA Reg E, requiring the consumer to make payments via electronic transfer cannot be a condition for offering a loan.
  7. If the consumer’s electronic payment request was returned as NSF, EZCORP would break the payment up into three parts (50% of the payment due, 30% of the payment due, and 20% or the payment due) and then send all three electronic payment requests simultaneously.  Consumers would sometimes have all three returned and incur NSF fees at the bank and from EZCORP.
  8. Informed consumers that they could stop the auto-payments at any time but then failed to honor those requests and often indicated the only way to get current was to use electronic payment.
  9. Informed consumers they could not pay off the debt early.
  10. Informed consumers about the dates and times that an auto-payment would be processed and regularly did not follow those disclosures to clients.
  11. When consumers requested that EZCORP stop making collection calls either verbally or in writing, the collection calls continued.

Penalties for these infractions included:

  1. $7.5 million fine
  2. $3 million pool to provide redress to consumers for NSF fees for electronic payments practices
  3. Barred from at-home and at-office collection efforts
  4. 130,000 accounts – what appears to be the entire EZCORP consumer lending portfolio – is no longer collectable.  No collection activity.  No payments accepted.  EZCORP must “amend, delete, or suppress any negative information relating to such debts.”