By: Murray Silverstein and Jacob Boehner
Former CFPB examiner and now whistle-blower, Cassandra Jackson, wrote to Attorney General Jeff Sessions recently that the CFPB falsified examination reports made during an examination of ACE Cash Express, one of the country’s largest payday lenders. ACE and the CFPB entered into a consent order in 2014 regarding ACE’s collection practices, which required that ACE pay $10 million to the government —$5 million in restitution and $5 million in civil penalties. The consent order and monetary penalties were based on the CFPB’s investigation and subsequent condemnation of ACE for, among other things, (1) deceptive and unfair debt collection calls; (2) failure to prevent, locate, or correct misconduct by third-party debt collectors; and (3) ACE’s training manuals advising collectors to “create a sense of urgency,” which the CFPB found abusive. Former Director Richard Cordray called ACE’s alleged conduct “predatory” and “appalling.”
Jackson’s claims in her letter to the Attorney General have raised serious questions as to the integrity of the CFPB’s conduct in investigating and penalizing ACE for its alleged prohibited practices. Jackson served as the Military Lending, Storefront Transactions Oversight, and Franchise Locations examiner for the ACE consent order’s follow-up examination. She claims that during this examination she was “asked to change, remove, and otherwise falsify documents” relating to the examination of ACE. She states that the pressure to falsify these documents came from the Examiner in Charge as well as others holding management positions. Jackson claims she was told to (1) cite ACE for a specific violation even though she had verified that ACE had complied with applicable law; (2) state ACE “did not provide, and that the CFPB did not receive, documents that would have satisfied the CFPB’s guidelines” even though Jackson received such documents from ACE; and (3) remove those exonerating documents from the case file’s folders. She goes on to state that, after her refusal to falsify the information, the Examiner in Charge changed the information contained in Jackson’s report and signed off on it, then sent it to the Field Manager who reviewed and accepted the report. Jackson claims that the falsified report was used to achieve the consent order with ACE and that her examination “did not find significant violations by the lender.” Further, Jackson states that her opposition to falsifying the information led to management informing her she was not performing at a high enough level, thus subjecting her to disciplinary action.
Jackson is not the first to criticize the CFPB in regards to the ACE investigation. Many criticized the consent order when it was first entered into in 2014, asserting that the CFPB extrapolated bad acts of several debt collectors onto ACE without adequate proof. Critics also believed the consent order was lacking in necessary details. The consent order, for example, failed to specify the number or frequency of improper collection calls by ACE. In fact, an independent expert, Deloitte Financial Advisory Services, randomly sampled ACE’s collection calls and only found potential FDCPA violations with 4% of those calls. Critics also questioned the basis for the $5 million fine as the consent order failed to state such basis.
Although the merit of Jackson’s claims is presently unknown, her allegations are, of course, very serious and require a proper investigation to determine their validity. If her claims are found to be true, critics of the CFPB will have a new platform as a basis for their campaign to obtain the Bureau’s dissolution.
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