Payday Loans
The OCC announced Tuesday that ACE Cash Express and Goleta National Bank have agreed to end their partnership of offering consumer “payday loans” by the end of this year. The OCC also fined ACE $250,000 and Goleta $75,000. The OCC said the penalties levied against ACE were mainly due to its failure to safeguard customer loan files and its pattern of excessive exceptions to Goleta policies and procedures. The OCC said Goleta failed to manage its relationship with ACE in a safe and sound manner, to violating the Equal Credit Opportunity Act and the Truth in Lending Act, as well as the privacy protections of the Gramm-Leach-Bliley Act. Earlier this month, a judge for the U.S. District Court for the Southern District of Indiana granted the motion to dismiss filed by ACE and Goleta National Bank in a lawsuit where the plaintiff alleged that GNB’s loans were made by ACE rather than GNB, and were therefore made in violation of Indiana law. The judge said that after reviewing the plaintiff’s complaint he found that GNB was the lender and that Section 85 of the National Bank Act, not Indiana law, regulated the permitted interest on GNB’s loan to the plaintiff. ACE has a total network of 1,191 check-cashing stores, consisting of 1,003 company-owned stores and 188 franchised stores in 35 states. (CF Library 10/3/02)