Banking and Finance Law Daily CFPB charges company with ‘tricking and trapping’ consumers
Thursday, May 12, 2016

CFPB charges company with ‘tricking and trapping’ consumers

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau has filed a complaint against All American Check Cashing, Inc., a company that offers check cashing and payday loans, for allegedly “tricking and trapping” consumers with deceptive tactics. All American’s owner, Michael Gray, also was charged. The CFPB’s lawsuit seeks to end All American’s “unlawful practices,” compensate consumers, and impose civil money penalties.

”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, Inc. is located in Madison, Miss. and offers check cashing services and payday loans at approximately 50 stores in Mississippi, Alabama, and Louisiana. The CFPB’s complaint also names Mid-State Finance, Inc. (doing business as Thrifty Check Advance), which offers check cashing and payday loans in at least one store in Pearl, Miss.

Allegations. The CFPB alleges that All American tried to keep consumers from learning how much they would be charged to cash a check and used deceptive tactics to stop consumers from backing out of transactions. The CFPB also alleges that All American made deceptive statements about the benefits of its high-cost payday loans and failed to provide refunds after consumers made overpayments on their loans. The company is charged with violating Sections.

1031(a), 1036(a), and 1054(a) of the Consumer Financial Protection Act (12 U.S.C. §§ 5531(a), 5536(a), and 5564(a)).

The bureau’s complaint alleges that All American:

  • “refuses” to tell consumers how much they will be charged, instructing employees to hide the check-cashing fees by counting out the money over the fee disclosure on the receipt and removing the “receipt and check as quickly as possible.” According to the complaint, employees are instructed to “NEVER TELL THE CUSTOMER THE FEE” in a training presentation;
  • traps consumers who change their minds about the transaction after learning of the fee. All American employees have lied to consumers and said that the transaction cannot be cancelled and falsely told consumers that reversing the transaction will take a long time. In some cases All American’s procedures actually do make it difficult or impossible for the consumer to cash the check elsewhere;
  • makes deceptive statements to consumers about the fees associated with its monthly payday lending model, while internally describing it as a “huge income booster” due to the extra fees consumers ended up paying; and
  • promises a better deal than those offered by competitors but charges higher fees than competitors.

The CFPB also alleges that consumers sometimes make overpayments to All American when paying back a loan and that the company does not notify consumers who overpaid on a loan. If the consumer does not request a refund, All American deletes the credit balance from their account, unfairly failing to provide refunds to hundreds of consumers.

Companies: All American Check Cashing, Inc.; Mid-State Finance, Inc.

MainStory: TopStory AlabamaNews CFPB ChecksElectronicTransfers EnforcementActions Loans LouisianaNews MississippiNews UDAAP

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