Extending prohibited title loans to military families, and charging nearly three times over the 36% annual interest rate cap for some of those, has earned a Savannah, Ga., firm a $10 million penalty, and another $5 million in consumer relief, under an ordered announced Thursday by the federal consumer financial protection agency.
According to the Consumer Financial Protection Bureau (CFPB), TitleMax of Savannah (which operates, the CFPB said, “a web of corporate entities operating under TMX Finance, broadly known as TitleMax”) violated the Military Lending Act (MLA) by extending prohibited title loans to military families. The agency claimed the firm often charged nearly three times more than the 36% annual interest rate cap.
“TitleMax tried to hide their unlawful activities by, among other things, altering the personal information of military borrowers to circumvent their protected status,” the bureau charged. The agency also asserted that TitleMax increased loan payments for borrowers by charging unlawful fees.
The CFPB said its order ends TitleMax’s illegal activities and requires the company to pay more than $5 million in consumer relief and a $10 million civil money penalty. The firm is also ordered to stop all illegal lending practices.
The agency noted that the firm – which has operations in 18 states with more than 1,000 locations – has been under a CFPB order since 2016 for its lending and debt-collection practices. In that order, the agency said it found that store employees, as part of their sales pitch for the company’s 30-day loans, offered consumers a “monthly option” for making loan payments and misrepresented the true cost of its loans if the consumers renewed them multiple times.
The CFPB said it also found that the company engaged in illegal high pressure debt collection practices. The CFPB in 2016 ordered the company to stop its unlawful practices and pay a $9 million penalty.
Since then, the bureau stated, the firm has continued its actions. Between Oct. 3, 2016, and Sept. 17, 2021, the CFPB said TitleMax made at least 2,670 prohibited auto title loans to borrowers covered under the MLA. It also charged borrowers unlawful fees on about 15,000 loans, the CFPB said.