All American Check Cashing’s refusal to answer complaints has led the Better Business Bureaus in Mississippi and Alabama to give grades of “F” to the Madison payday lender that the Mississippi Department of Banking & Finance says did loan rollovers that violated state law.
The Department of Banking & Finance put All American Check Cashing and its 41 stores in Mississippi under a cease and desist order in late June after the company initially refused to let examiners see transaction records when they showed up at 15 of the company’s Mississippi stores.
Under the cease and desist order, All American must stop all lending under what the company calls its “Monthly Lending Program,” a practice by which examiners say the company illegally directed employees to accept only the fee on a delayed deposit check. Mississippi law forbids rollovers by which fees on the old loan are paid and a new loan is issued with new fees. The “delayed deposit” check is a post-dated check the borrower must leave with the payday lender.
The so-called Monthly Lending Program also outlined how to illegally roll over a check during the middle of each month, the cease and desist order states.
The order notes All American designed the program especially for borrowers who get monthly paychecks or government benefit checks.
The Better Business Bureau chapters in Mississippi and Alabama say they handed All American Check Cashing the failing grade based on its refusal to respond to BBB’s investigators.
The high-interest lending done by payday lenders has led the BBB to a policy of not accrediting or granting membership to them, according to John O’Hara, CEO of the BBB of Mississippi.
But the BBB does investigate complaints it receives about them, he said. The organization has received seven complaints against All American in last three years. It closed three of the complaints in the last year, the BBB of Mississippi says.
In three of the seven cases, the BBB of Mississippi received no response from All American, the organization says. “They kind of pick and choose” the complaints to which they will respond, O’Hara said.
This is contrary to the way most businesses handle BBB queries, he noted. “We usually see all or nothing.”
Businesses want to respond “so they can tell their side of the story,” O’Hara added.
In Alabama, the Bessemer-based BBB of Central and South Alabama received a collections complaint in May to which All American did not respond.
O’Hara said in many of the BBB investigations in which a payday lender responds the conclusion is that the borrower did not thoroughly read the loan papers and fully understand what he was signing.
In many instances, the borrower is “just happy to get the money,” he added.
A former several-year employee of All American said the company ordered store managers to “do whatever it takes to make the numbers.”
One woman who complained to the BBB of Mississippi charged that a staffer hounded her out the door after she visited the Ridgeland store to pay off her loan. “She stomped her feet and pointed her finger and told me to leave, pointing at the door. I asked her did she not want me to pay my bill and she said ‘leave.’”
The staffer said she didn’t want me to pay; she wanted me to leave, the BBB complaint stated.
Near the end of the incident, another All American staffer had to stop the co-worker from “jumping over the counter as if she was coming for me,” the borrower claimed in the BBB complaint.
Meanwhile, the head of the Mississippi Department of Banking and Finance says it likely will be another 30 to 45 days until the state completes its investigation of All American, but the cease and desist order will remain in place.
At the close of the investigation, examiners recommend whether to assess any penalties, which could include fines of up to $500 per infraction and possible revocation of the lender’s license.
If the target of an investigation asks for a hearing on the investigation’s findings, the banking commissioner holds a hearing at which the commissioner either upholds or rejects the conclusions of examiners.
In either instance, the outcome is posted on the banking department’s website, according to Commissioner Jerry Wilson.
However, the details of the investigation remain confidential, just as they do when the department investigates a state-chartered bank.
Payday lending companies undergo state examinations every two years, the banking department says. Lenders are not given a specific date for the exams but instead receive a timeframe in which they will occur.
Commissioner Wilson said if the investigation finds All American assessed fees beyond those allowed under state law, borrowers could receive refunds from the lender.
“Restitution is definitely a possibility,” Wilson said.
At the federal level, the Consumer Financial Protection Bureau last month ordered Texas-based Ace Cash Express to refund $5 million to borrowers over wrongful loan practices. In addition, the Bureau ordered Ace to pay a $5 million fine.
Ace has only one Mississippi store, a franchise operation in Hattiesburg.
All American Check Cashing has been a fixture in Mississippi payday lending for more than a decade. Madison businessman Michael Gray founded the company with the opening of a single store in Canton in 1998.
Today, it has a few dozen stores in Mississippi and a handful in neighboring states. It’s headquartered in Madison at 505 Cobblestone Court, Suite B.
Workers at company stores are forbidden from providing the number to the headquarters, though they do give a toll-free number for customers to leave messages about their treatment at the stores.
After failing to find a phone number through online searches, the Mississippi Business Journal found the number on All American’s annual report filed with the Secretary of State.
Calls to All American’s headquarters have not been returned; nor have calls to the mobile phone of Kelvin Hall, chief supervisor.
The Department of Banking and Finance said it began investigating All American after receiving complaints, though it did not specify the source of the complaints.
The Mississippi Center for Justice said the complaints that prompted the action came from former employees.
One former employee told the MBJ that All American limits its loans to $100 and $200 but will make any combination of them up the $500 maximum allowed by state law.
Why not a lump sum loan of $500?
That is not preferred, the Center for Justice says, because state law limits fees on that amount to $44 and gives the borrower 28 days to repay. But with five loans of $100 they can charge $22 on each and set a 14-day repayment, said Paheadra Robinson, an attorney and the Center for Justice’s director of consumer protection, in an interview last week.
Robinson said the kind of illegal rollovers All American is alleged to have done are common among most all of Mississippi’s 1,000-plus payday lending stores.
The idea, she said, is simply to keep the borrower paying the $22 in fees on each $100 of loan value for as many weeks as possible without paying down on the principal.
In All American’s case, the company outlined the practice on its intranet, the banking department said in its cease and desist order.
Going into the stores and looking at transactions revealed employees dutifully carried out the practice detailed on All American’s intranet, the order says, specifically noting:
“Multiple examined locations have also confirmed participation/use of the program.”