Check Cashing and Payday Loan Company Lied to Customers about Service Fees, Says CFPB
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Check Cashing and Payday Loan Company Lied to Customers about Service Fees, Says CFPB

The company also pressured customers into expensive loan programs and withheld customer overpayments

May 13, 2016

A Mississippi-based check cashing and payday loan company told its employees to lie to customers and hide or misrepresent fees associated with its services.

The allegations are a part of a lawsuit brought on by the Consumer Financial Protection Bureau (CFPB) against All American Check Cashing and its owner, Michael Gray. The agency claims that the company used lies and deceptive practices to trick consumers and trap them in expensive transactions or short term loans.

"Today we are taking action against All American Check Cashing for tricking and trapping consumers," said CFPB Director Richard Cordray. "Consumers deserve accurate and honest information from the financial institutions they depend on, but All American instead devised elaborate schemes to hide costs and take advantage of vulnerable borrowers."

All American Check Cashing offers check cashing services and payday loans at about 50 stores in Mississippi, Alabama, and Louisiana. Mid-State Finance is also named in the complaint. The company makes about $1 million each year in check cashing fees by charging fixed amounts that vary only by state and whether a check is government issues. Fees range between 2 and 5 percent.

But the average consumer had no idea what those fees were. Employees were forbidden from disclosing the fees even if asked. Instead, employees are told to deflect the consumers' questions with small talk and irrelevant information. Employees would also count out money on top of the receipt that listed the fee, before removing the check and the receipt before the customer could see it.

Customers who found out the fees and wanted to back out of the transaction were met with more lies from employees. Staff told customers that the transaction can't be cancelled or that it will take a long time to reverse. Employees also stamped the back of the check making it impossible for customers to deposit it elsewhere.

All American and its employees also made deceptive statements about the cost of its multiple loan program for consumers who receive their benefits or paycheck once a month. Employees were instructed to aggressively pressure consumers into its monthly lending program often claiming that the rates were better with All American than other companies, which wasn't the case.

As if all that wasn't bad enough, All American failed to notify customers if they overpaid. Instead of refunding the overpayment, it would delete the credit balance from their account. As a result, hundreds of customers failed to receive refunds.

The CFPB's complaint against All American Check Cashing, Inc., Mid-State Finance, Inc. and Michael Gray seeks monetary relief, injunctive relief, and penalties.

More information about the lawsuit can be found here.