Consumer Federation of America Applauds Comptroller For Another Crackdown on Payday Lending

October 29, 2002
Jean Ann Fox, (202) 387-6121

The Consumer Federation of America today hailed action by the Comptroller of the Currency to prevent payday lender ACE Cash Express, Inc., from using a national bank charter to circumvent state usury and small loan laws in 18 states and the District of Columbia.

The action means ACE can no longer effectively "rent" the charter of Goleta National Bank of Goleta, California, in order to make payday loans under terms that violate state laws meant to protect financially vulnerable consumers.

"We applaud the Comptroller for taking strong action for the third time this year against a national bank on safety and soundness grounds for partnering with payday lenders," said Jean Ann Fox, CFA's consumer protection director. "CFA has been vocal in criticizing these relationships as a misuse of banks in order to evade state consumer protection laws."

In November 2001, CFA documented payday lenders' growing practice of partnering with federally insured depository institutions to make loans that would otherwise violate state laws. Fox noted that the ACE-Goleta relationship has triggered legal actions in Colorado, Ohio, Maryland and North Carolina and class action lawsuits across the country. The CFA report is available at

Earlier in 2002, the Comptroller issued a cease and desist order against Eagle National Bank of Upper Darby, Pennsylvania, to stop payday lending through the Dollar Financial Group chain of check cashers. In an on-going case, the Comptroller filed charges against People's National Bank of Paris, Texas, for risky payday loans through payday lender Advance America.

Although the Comptroller's action is important, Fox noted it will not stop ACE Cash Express from shopping for another federally insured bank to continue rent-a-bank payday lending. "Congress must pass legislation to take banks completely out of the payday lending business to protect consumers from usury," she said.