Home » NEWS » Banking & Finance » UPDATED: State moves to close down payday lender All American, heavily fine owner

UPDATED: State moves to close down payday lender All American, heavily fine owner


State banking regulators say they are ready to shut down Madison payday lender All American Check Cashing’s 43 stores and fine owner Michael Gray $3 million for illegal loan rollovers and other offenses.

The penalties stem from what the Mississippi Department of Banking and Consumer Finance says are “numerous violations” of both the state’s Check Cashers Act and the Mississippi Title Pledge Act. “The most egregious violations include company-wide adoptions of policies to encourage or condone repeatedly paying off one loan with another,” Taft Webb, director of the Consumer Finance Division, said in describing the rollovers.

Webb, in a Jan. 29 letter to Gray, said instances of the rollovers “are so widespread that they are innumerable.”

Payday loan rollovers by which a new loan is given to pay off a standing loan are illegal in Mississippi. The new loans come with new fees that are added to fees assessed in the original loan.

Webb said he has documented evidence of 1,600 violations that involved 6,500 customers.

Further, Webb said the Department’s 19-month investigation found 692 violations involving intentional refusal to pay refunds to customers and “overt actions” to prevent discovery of such actions.

Other violations cited include:

>>>Allowing 183 customers to receive payday loans without having an open and active checking account (payday loans are suppose to be repaid with a check dated for expiration of the loan period);

>>>Intentionally instructing employees to violate the Title Pledge Act by “flip-increasing” title-pledge loans and intentional refusal to provide the banking department access to licensees’ business records. Webb put the number of such violations at 7,400.

Gray’s troubles don’t end there.

The federal Consumer Financial Protection Bureau has taken a close look at All American’s lending and collections practices and apparently found violations similar to those discovered by the state. The watchdog agency is especially concerned with tactics payday lenders use to extract payments from borrowers.

All American says it made a “substantial” settlement offer to the Bureau in hopes of avoiding more stringent sanctions.

Created through the Dodd-Frank Wall Street Financial Reform and Consumer Protection Act, the Bureau has shown a willingness to put severe penalties on payday lenders who run astray of state and federal laws. In July 2014, it fined Texas-based ACE Cash Express, a large payday lender with a franchise store in Hattiesburg, $10 million, of which $5 million was to be restitution to victimized customers.

That penalty followed by slightly more than a year the Bureau’s more than $14 million in penalties against large-scale payday lender Cash America.

Officials in the Mississippi Department of Banking and Consumer Finance declined to talk specifically about the All American case. They indicated, however, that restitution to affected consumers would be a condition that must be met in order for violations to be resolved.

Gray, through his Jackson attorney Dale Danks Jr., says the state action would force his statewide payday lending operation to shut down – an outcome state regulators apparently seek to achieve.

Having concluded its investigation into the alleged illegal loan rollovers by All American, the banking department has given the company until Feb. 1 to reach an agreement “at least in principle,” the payday lender says.

In its Jan. 29 letter to Gray, the banking department said Gray can pay the $3 million within 10 business days and accept the permanent license revocations or request a hearing before Banking Commissioner Charlotte Corley.

All American responded by asking a federal court for an injunction against Mississippi banking regulators.

The payday lender says state agents sent a letter in January that made clear they want to impose “draconian measures” on the company that would cause it to “cease as an on-going entity.”

“The action proposed by the Department in its January letter would necessarily cause All American irreparable harm,” Danks said in a complaint filed Jan. 29 with the U.S. District Court for the Southern District of Mississippi.

Further, the payday lender said sanctions contemplated by the state would “wipe out” the company and leave it without “cash or other assets” to pay any potential penalties levied by the banking department.

The admission that All American sought to settle CFPB claims is included in the federal complaint.

State agents began a probe in June 2014 of alleged illegal rollover loans by All American and last May handed the statewide payday lender a report on its findings.

Mississippi bank regulators charge that All American routinely illegally rolled over loans that left borrowers on the hook for hundreds, if not thousands, of dollars on small dollar loans. State banking regulators have let All American operate under a temporary license since it put the company and its 43 stores around the state under a June 2014 cease-and-desist order forbidding any more loan rollovers.

The order followed a June 16, 2014 raid on a half dozen All American stores and the uncovering of what regulators say were instructions on the company intranet detailing how to do the illegal loan rollovers. Gray, in an interview in late 2014 with the Mississippi Business Journal, disavowed any knowledge of the training document. A former executive with the company says All American used the document in manager training sessions, however.

In its federal filing, All American called the raids illegal and says banking department agents intimidated employees as well as interfered with customers seeking loans. “The agents followed customers out of the All American stores and pressed those customers for desired information,” attorney Danks said in the complaint.

Agents “went so far as threatening employees with jail time if they did not comply with the agents’ instructions to change answers,” Danks added.

Danks did not return a phone call seeking further comment.

The move against All America marks the first significant penalties proposed against a payday lending industry that Mississippi lawmakers made a permanent part of the state’s authorized financial services in 2013. The 2013 legislation made permanent the five-year renewal legislators gave payday lending in 2012.

In that legislation, lawmakers granted payday lenders authority to increase loans and fees to $500 from a previous cap of $400.

In that same year, Mississippi’s slightly more than 1,036 payday lending stores did $1.4 billion in business, generating $261 million in income for payday lenders, according to the Center for Responsible Lending.

Attorney Whitney Barkley, the Center’s policy counsel, said prohibitions on payday loan rollovers such as the one Mississippi has do not stem financial damage to individual and households in Mississippi. The problem, she said, is high interest and the frequency of loans to individuals.

“Seventy-five percent of the fees come from borrowers who have 10 or more loans in a year,” Barkley said.

Interest-rate caps of 36 percent are more effective in easing the debt burden of individuals and families, she said, and put the annual percentage rate collected by Mississippi’s payday lenders at 520 percent on an average loan of $350.




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About Ted Carter


  1. Let’s hope Gray and his “All American” usury outfit can be shut down. In fact, this entire “industry” should be shut down by rescinding the law that allowed them to operate in the first place. They are actually “anti-American” and “unAmerican” in that they prey on the most vulnerable members of our society. In place of these loan sharks lets encourage the Federal government to reinstate postal banking through the United States Postal Service. Checking account and passbook savings accounts for low-income people (as well as others) could pave the way for small loans to be offered at reasonable rates using personal accounts as collateral. This is an idea whose time has come. This can easily be done since postal banking already existed previously. It was foolishly abolished as part of an attempted takeover of the mail business by UPS and Fedex. Meanwhile, thanks to the Mississippi Department of Banking and Consumer Finance for going after this criminal enterprise. May the Federal CFPB finish the job the state has begun.

  2. Lending has regulations in place at all levels. It’s not the wild west that payday loan opponents make it out to be. Existing rules and regulations can address the vast majority of issues posed by these loans.

  3. Brandy nicole Gant

    So do we still have to pay the loan back

  4. Its a long time coming. The man is a thief.

  5. Former Manager at a location that was doing illegal roll overs and keeping customers in debt.

    Michael Gray tried to talk his employees out of talking about the fees. He knew what was going on. Now he has Percy there to get the heat off of him and to possibly run the company under a different name. A few supervisor knew and most have resigned or was fired for speaking their mind except Laura, she knows a hell of alot. She was almost fired 4 times but managed to have her job because of assumed evidence she had hidden on Michael. We had to beg people to maintain a loan and not to payoff because the supervisor continued to remind us of the bonus. People considered us as just a bill because we always rewrite the loan after they only paid the fee. A lot of employees left because of the practices. Field calls to the homes and some managers discussing customer loans with their children or spouse. When we tried to help customers on how to pay off (one check at a time), especially monthly, we were verbally reprimanded. All American could have been a great place. They paid well, but we didn’t know they were ruining people. Title loans were a nightmare. The payment fir 10 months was almost 150% interest. SHUT THEM DOWN! TOO MANY CHANCES AND ARROGANCE.

  6. The one in Brandon Ms. needs to be shut down.Trying to pay back a loan now a different person is calling saying thay legally they can’t take partial payments but they already did once ! Told me to borrow it and then re- write to pay whomever I borrowed from back?! I am trying to get out of this and do not want to re-write! They are calling my Mother now.They will not work with me at all! I am not trying to get out of paying them I just can’t pay it back all at once.If I had a way to borrow the money to pay them back don’t you think I would have done this already??

  7. Are they going to be shut down? do you know any recent info? This is the worst place to try to deal with.

  8. They say they won’t accept any money if it’s not the full amount. They also told me to borrow from somebody, re-write and pay that person back. I’ll just send them what I can every week. They’re not going to send the money back to me and I’ll keep track of how much I’m sending them until it’s paid off. I tried to be honest and work out arrangements, but they say they won’t accept it…

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