OCC Takes Action Against ACE Cash Express, Inc. and Goleta Nationwide Bank

Share This Site:

WASHINGTON any office of this Comptroller associated with the Currency announced today that ACE money Express, Inc., and Goleta nationwide Bank, Goleta, California, signed cease and desist instructions needing them to get rid of unsafe and unsound payday financing tasks also to spend $325,000 in civil cash charges. ACE is really a service that is third-party for Goleta into the origination, servicing, and number of the payday advances booked by the bank. ACE provides payday advances on behalf of Goleta in 18 states while the District of Columbia.

ACE consented to end lending that is payday undertaken through Goleta, and also to spend $250,000 in penalties.

your order also prohibits ACE from stepping into any type of written or dental agreement to offer any solutions, including payday financing, to your nationwide bank or its subsidiaries minus the previous approval of this OCC. In addition, the cease and desist purchase requires ACE to indemnify Goleta for 100 % associated with the expenses, costs, legal costs, and damages from 3rd party claims.

Those things against ACE were prompted by a number of factors, including ACE’s failure to guard 641 consumer loan files. The files, which represented pay day loans carried on Goleta’s publications, had been discarded in a trash dumpster in Portsmouth, Virginia in August 2002. The OCC had been willing to allege that the disposal that is improper of files lead to violations of legal guidelines. The OCC additionally determined that ACE committed unsafe and unsound techniques that included a pattern of exorbitant exceptions to Goleta policies and procedures and a pattern of mismanagement of Goleta loan files.

“we now have expressed concern several times in past times concerning the dangers nationwide online title KS banking institutions reveal themselves to once they lease out their charters to third-party vendors and neglect to exercise noise oversight,” stated Comptroller regarding the Currency John D. Hawke, Jr.

“ACE’s failure to shield the files of clients whose loans had been scheduled at Goleta shows so just how high-risk those relationships could be,” Mr. Hawke added. “If those files had dropped in to the incorrect arms, the privacy of clients could have been seriously compromised plus the bank could have faced reputation that is significant appropriate risks.”

The OCC unearthed that ACE contributed to violations for the Equal Credit chance Act, which requires that loan documents be retained for 25 months, as well as the Truth in Lending Act, which requires that proof of TILA disclosures be preserved for a couple of years.

When it comes to Goleta, the OCC unearthed that the bank did not maintain its relationship with ACE in a secure and sound way. Along with breaking the Equal Credit chance Act while the Truth in Lending Act, Goleta violated soundness and safety requirements and in addition violated the privacy protections regarding the Gramm-Leach-Bliley Act, which sets standards for safeguarding and keeping the privacy of consumer information.

These violations and unsafe and practices that are unsound up to a cease and desist purchase against Goleta.

your order calls for Goleta to pay for $75,000 in civil cash charges also to terminate its lending that is payday relationship ACE by January 1, 2003. To ascertain if other loan files are lost, your order compels Goleta to examine an example of 5 per cent of most loan files at each and every ACE shop. If one or more loan file is lacking through the test, Goleta is needed to validate all the other loan files at that specific ACE shop.

The order also requires Goleta to notify all applicants whose payday loan files were lost to protect the privacy rights of consumers. This notification must advise the customer of every actions they might take to deal with prospective identity theft.

Associated Hyper Hyper Links

  • Goleta Stipulation (PDF)
  • Goleta Consent Purchase (PDF)
  • ACE Stipulation (PDF)
  • ACE Consent Purchase (PDF)

Media Contact

Robert M. Garsson (202) 874-5770