When customers fell behind on repaying their short-term, small-dollar loans, Ace Cash Express threatened jail time or pressured them into taking out new loans with exorbitant fees to cover the debt, the Washington Post reported today. Ace was so intent on squeezing money out of customers that its training manual included a graphic of a step-by-step loan process that could trap delinquent borrowers in a cycle of debt, the Consumer Financial Protection Bureau said yesterday. Those sorts of abusive debt-collection practices are at the heart of the $10 million settlement the government watchdog reached with Ace, one of the nation’s largest payday lenders. The Irving, Tex.-based company agreed to the deal but denies wrongdoing. Ace must pay $5 million to refund delinquent customers who were subject to illegal collection practices from March 7, 2011 to Sept. 12, 2012. Ace must also pay a $5 million civil penalty and end its abusive tactics, according to the order.
