CFPB seeks injunction, money penalties from pawn lenders over MLA violations

Allegations of Military Lending Act (MLA) violations by pawn lenders First Cash, Inc., and its wholly owned subsidiary Cash America West, Inc., are at the root of a lawsuit filed Friday by the Consumer Financial Protection Bureau (CFPB) that seeks an injunction, borrower redress, and a civil money penalty, the bureau said Friday.

The bureau said that FirstCash, Inc., is a non-bank corporation operating out of Fort Worth, Texas. FirstCash and its wholly owned subsidiaries, it said, operate more than 1,000 pawnshops throughout the U.S. It said FirstCash is a publicly traded firm with a current market capitalization of about $3.5 billion. It said Cash America West, Inc., operates pawn stores in Arizona, Nevada, Utah, and Washington.

The bureau alleges that that FirstCash and Cash America West between June 2017 and May 2021 violated the MLA by making more than 3,600 pawn loans from their Arizona, Nevada, Utah, and Washington stores with an annual percentage rate above the 36% allowed by the MLA and that the unlawful loans had APRs that frequently exceeded 200%. (These loans are just the ones for which the bureau has transactional data, and the bureau alleges there were additional loans in violation of the MLA.) The CFPB also said the loan contracts violated the MLA by requiring borrowers to sign away their ability to sue and by failing to make all required loan disclosures.

Moreover, the CFPB said that in 2013, it ordered Cash America International, Inc., to halt misconduct against military families, prohibiting Cash America and its successors from violating the MLA. FirstCash is a successor to Cash America and therefore subject to the 2013 order, it said; the bureau alleges that FirstCash’s MLA violations violated the 2013 order.

CFPB Sues Pawn Lenders for Cheating Military Families