Cash America reaches $19 million settlement with U.S.

Payday lender 'robo-signed' documents

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WASHINGTON -- For five years, employees at Cash America, one of the country's largest payday lenders, were told to stamp a lawyer's signature on court documents used to sue customers for past-due debts.

This "robo-signing" helped the company improperly squeeze money out of at least 14,397 Americans, who are entitled to millions of dollars in restitution, the Consumer Financial Protection Bureau said last week.

The government watchdog said it had reached a $19 million settlement with Cash America for those and other abusive practices -- its first with a short-term, small-dollar lender.

The bureau also discovered instances of Cash America charging active-duty service members and their families more than 36 percent interest on payday loans in violation of the Military Lending Act, according to the enforcement order.

The Fort Worth, Texas-based company must pay up to $14 million to borrowers who were subject to faulty debt-collection lawsuits in Ohio from 2008 to January 2013.

Cash America, a $1.8 billion publicly traded company, has repaid about $6 million to military borrowers and victims of robo-signing.

In addition, it stopped attempting to collect on debts that the CFPB identified as problematic and alerted the credit bureaus to the erroneous black mark on borrowers' reports.

Cash America also must pay a $5 million civil penalty and develop better compliance-management systems, according to the order.

"This action should send several clear messages: First, robo-signing practices are illegal wherever they occur, and they need to stop -- period," CFPB Director Richard Cordray said in a conference call.

"Second, violations of the Military Lending Act harm our service members and will be vigorously policed. Third, the bureau will detect and punish entities that withhold, destroy or hide information relevant to our exams."

Problems at Cash America came to light when the bureau conducted its first exam of the company in 2012.

Wednesday's order against Cash America is part of a broader industry crackdown.

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