WASHINGTON (AP) — Ace Cash Express Inc. has agreed to pay $10 million in a settlement with federal regulators who accused the payday lender of illegally harassing borrowers to collect debts and get them to take out additional loans.

The Consumer Financial Protection Bureau announced the agreement with Ace, one of the biggest payday lenders in the U.S. The company will pay a $5 million fine and return $5 million to affected customers.

The CFPB said Thursday it was its first action against a payday lender for pressuring consumers into a cycle of debt.

The agency said that ACE used illegal tactics such as harassing customers and making threats of lawsuits or criminal prosecution against them. The government said ACE collectors also threatened to charge customers extra fees and report them to the consumer credit reporting agencies — in violation of company policy.

Ace, based in Irving, Texas, didn’t admit wrongdoing in the settlement. The company said in a statement it has cut ties with the outside collection agency which the regulators had expressed concerns about.

The company also said it hired an outside expert to review its data, and found that more than 96 percent of its phone calls from March 2011 through February 2012 complied with proper standards for collecting debts from customers. ACE said it has policies that prevent overdue borrowers from taking out new loans, so that a customer with a delinquent account isn’t allowed to take out another loan until the earlier one is paid off.

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