Federal Deposit Insurance Corporation Agrees to Settlement in Operation Choke Point Lawsuit

SPARTANBURG, S.C., May 22, 2019 /PRNewswire/ -- Advance America and Check Into Cash announced today that they have reached a settlement with the Federal Deposit Insurance Corporation (FDIC) regarding Operation Choke Point, the FDIC program that pressured banks to cut ties with certain categories of lawful businesses, including payday lenders.

"Five years after taking the extreme and costly step of suing federal regulators, we are pleased with the FDIC's actions to address past efforts to cut off our companies' access to the U.S. banking system," said Jessica Rustin, Advance America's Chief Legal Officer. "We uncovered how some FDIC leaders and officials executed a campaign motivated by personal scorn for our industry, contempt for our millions of customers, and blatant disregard for due process. This settlement will help to prevent this disenfranchisement from happening again – to our business or any other legal, regulated business."

As a result of this settlement agreement, the FDIC will issue a statement to reiterate its policies. The FDIC previously acknowledged that certain employees acted in a manner inconsistent with FDIC policies and existing guidance with respect to payday lenders, creating misperceptions about its policies. These attempts have proven ineffective in resolving the issue.

The steps taken as part of this settlement are consistent with statements made by FDIC Chair Jelena McWilliams, who declared in a letter to members of Congress earlier this year that "[r]egulatory threats, undue pressure, coercion, and intimidation designed to restrict access to financial services for lawful businesses have no place at this agency."

"While the FDIC took steps to reinforce its policies with staff and the industry, the effects of Operation Choke Point linger, with banks continuing to terminate accounts and refuse services to payday lenders," said Greg Madson, Chief Legal Officer at Check Into Cash. "It is our hope that this settlement clarifies once and for all the FDIC's policies, so that banks feel free to provide services to lawful businesses operating in compliance with applicable federal and state laws, without fear of regulatory pressure or retribution."

The FDIC will conduct training of its examination workforce on these policies by the end of 2019 to ensure that its examiners adhere to the highest standards of conduct and respect the rule of law. The training will specifically include matters related to Operation Choke Point. 

Lastly, the FDIC has established a robust complaint process through which information regarding potential violations of these policies may be investigated. If banks or customers continue to be concerned that FDIC personnel are not following the FDIC's policies regarding Operation Chokepoint, they may email the FDIC at [email protected].

In June 2014, the Community Financial Services Association of America (CFSA), the national association for small-dollar lenders, joined industry partners and its largest member companies, Advance America and Check Into Cash, to file the lawsuit, Advance America et al. v. Federal Deposit Insurance Corp. et al., to end Operation Choke Point and the government's persistent regulatory overreach. Discovery exposing depositions and damaging emails of government officials, most notably at the FDIC, was released in October 2018 as part of the Plaintiffs' Motion for Summary Judgment in the lawsuit. The settlement is the result of court-ordered mediation prior to a judge's ruling on summary judgment.

"Certain FDIC officials operated well outside of the rule of law and disregarded due process when they targeted lawful businesses under Operation Choke Point," said Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA). "Regulatory policy must never be predicated on personal preferences and this settlement should make clear that such abuses of power will not be tolerated."

About Advance America Cash Advance
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country's leading provider of non-bank cash advance services, with approximately 1,900 centers across the country. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices. Please visit www.AdvanceAmerica.net for more information.

About Check Into Cash
Founded in Cleveland, Tennessee in 1993 by entrepreneur and philanthropist Allan Jones, the Check Into Cash brand is a state licensed and regulated small balance lender. Check Into Cash stores offer check cashing, Western Union® money transfers, prepaid U.S. Money Cards, and other convenient services as a complete One Stop Money Shop®.

Check Into Cash is a founding member of the Community Financial Services Association of America (CFSA), the trade association representing the nation's payday lenders. The CFSA advocates for best practices and helps enact legislation that balances the needs of the consumer with the interests of the industry.

SOURCE Advance America Cash Advance; Check Into Cash