December 20th, 2016
In early 2015, payday lender Moneytree presented the “unbanked” aka people who don’t have bank accounts — a dwindling but sizable group of Americans — with an enticing check-cashing offer for their annual tax refund.
The company claimed in some marketing that it would cash consumers’ tax refund checks for $1.99, no matter the size of the check, which is cheaper than some other check-cashing options. But it turned out the size of the check did matter as the actual fee was not a flat rate of $1.99 but 1.99 percent of the check, according to the Consumer Financial Protection Bureau (CFPB), which has ordered Moneytree to pay $255,000 to consumers and a $250,000 civil penalty for its alleged deceptive advertising practices.
CFPB said the offer was advertised online and appeared tens of thousands of times. In 2015, when the average tax refund was $3,120, consumers would have paid on average $60 more for the service than the advertised $1.99.
The CFPB also alleged that Moneytree made false threats regarding its ability to repossess borrowers’ vehicles if they didn’t make past-due payments on their loans and that the company made hundreds of unauthorized withdrawals from customers’ accounts.
Moneytree has 105 branches across the five states of California, Colorado, Idaho, Nevada, and Washington.
Make sure you know for sure what a company’s check-cashing fee is before you cash that big check and be ever wary of payday loans that can carry astronomical interest rates.
Find more of our coverage on payday lenders here.