By Andrew A. Turner, J.D.
EZCORP, Inc., a high-cost, short-term lender has settled charges brought by the Consumer Financial Protection Bureau that it attempted to collect debts with illegal visits to consumers at their homes and workplaces. EZCORP agreed to refund $7.5 million to 93,000 consumers, pay $3 million in penalties, and stop collection of remaining payday and installment loan debts owed by roughly 130,000 consumers.
In a consent order, the CFPB also found that EZCORP risked exposing consumers’ debts to third parties, falsely threatened consumers with litigation for non-payment of debts, and unfairly made multiple electronic withdrawal attempts from consumer accounts, causing mounting bank fees. EZCORP did not admit or deny the CFPB’s findings, saying that it had agreed to the consent order to settle “legacy issues.”
Prior to the CFPB’s investigation that resulted in the bureau’s enforcement action, EZCORP, and its related entities—EZPAWN, L.P and EZMONEY—provided loans, in 15 states and from more than 500 storefronts. In July 2015, EZCORP announced that it would cease offering payday, installment, and auto-title loans in the United States to concentrate on its core pawn brokering operations.
Industry warning. In light of its enforcement action, the CFPB also issued Compliance Bulletin 2015-07 warning the financial services industry, and in particular lenders and debt collectors, about potentially unlawful conduct during in-person collections.
The bulletin highlights that in-person collection visits may be harassment and may result in third parties, such as consumers’ co-workers, supervisors, roommates, landlords, or neighbors, learning that the consumer has debts in collection. Revealing such information to third parties could harm the consumer’s reputation and result in negative employment consequences. The bulletin also highlights that it is illegal for those subject to the Fair Debt Collection Practices Act to engage in practices such as contacting consumers to collect on debt at times or places known to be inconvenient to the consumer, except in very limited circumstances.
Common decency. Commenting on the enforcement action and the bulletin, CFPB Director Richard Cordray stated, “People struggling to pay their bills should not also fear harassment, humiliation, or negative employment consequences because of debt collectors. 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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