Financial Services Company Moneytree Must Pay for Deceptive Advertising and Collection Practices

The Consumer Financial Protection Bureau has ordered the company to pay consumers $255,000

Financial Services Company Moneytree Must Pay for Deceptive Advertising and Collection Practices
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December 19, 2016

Financial services company Moneytree must pay $255,000 to consumers for deceptive advertising and collection practices, says the Consumer Financial Protection Bureau (CFPB).

Moneytree, which offers payday loans and check-cashing services, allegedly misled customers by using deceptive online advertisements and collections letters. It also made electronic transfers from customers' bank accounts that the customers had not authorized.

The CFPB ordered Moneytree to stop its illegal practices, pay $255,000 to consumers in refunds, and pay a civil penalty of $250,000.

"Consumers deserve honesty and transparency from the financial institutions they rely on," said CFPB Director Richard Cordray. "Moneytree's practices meant consumers were making decisions based on false and deceptive information, and today's action will give the company's customers the redress they are owed."

The agency has carried out numerous supervisory reviews of the company's lending, marketing, and collections practices, and it has identified significant weaknesses in the compliance-management system in each. In its order, the CFPB found that Moneytree had not addressed those weaknesses and had deceived customers regarding the price of check-cashing services, made false threats to repossess vehicles when collecting unsecured loans that were overdue, and withdrew money from customers' bank accounts without their written consent.

The CFPB specifically found that Moneytree:

  • Used deceptive advertisements online. At the beginning of 2015, the company placed advertisements online that offered to cash tax refund checks for "1.99." In reality, the fee for the service was 1.99 percent of the amount of the check cashed by the consumer, rather than the $1.99 implied in the advertisements. Consumers had to go to one of Moneytree's physical branches in order to take advantage of the advertisement's offer, which appeared online tens of thousands of times.
  • Falsely told customers that their vehicles could be repossessed. From late 2014 until early 2015, the company issued letters to hundreds of customers that indicated that their vehicles could be repossessed if the customers did not make past-due payments on their installment loans. However, none of these customers had a loan secured by his or her vehicle, and Moneytree did not have either the right or the ability to repossess it.
  • Withdrew funds from consumers' bank accounts without consent. In more than 700 cases, Moneytree did not get advance authorization from customers to make withdrawals from their bank accounts, which is a violation of federal law.

The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the CFPB authority to take action against any institution or person who engages in unfair, deceptive, or abusive acts or practices or that violate federal consumer financial laws in any other way. Under the agency's new order, Moneytree must do the following:

  • Pay $255,000 in refunds to victims. Moneytree will pay roughly $255,000 to consumers who paid more than the company had advertised for its check-cashing service, who got one or more of its deceptive collection letters, or who were charged fees by their financial institutions when Moneytree made an electronic withdrawal of funds without proper authorization.
  • Stop engaging in illegal practices. Moneytree has to stop its deceptive practices and get consumers' consent for any electronic transfers of funds.
  • Pay a $250,000 civil penalty. Moneytree will pay $250,000 to the CFPB's Civil Penalty Fund.