On December 19, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it had filed actions against four separate Virginia-based pawnbrokers for alleged violations of the Truth in Lending Act (TILA) and Consumer Financial Protection Act (CFPA). The nearly identical Complaints allege that the pawnbrokers misled consumers by enticing them with low annual percentage rates (APRs), but then tacking on “interest,” “storage,” and other fees and other finance charges that as much as doubled the consumers’ cost of credit. The CFPB alleged that by failing to incorporate these charges into their APR disclosures, the pawnbrokers did not provide an accurate description of the APR, as required by TILA’s implementing regulations (Regulation Z).
The CFPB seeks restitution for consumers, an injunction against further violation of TILA or the CFPA, disgorgement, damages, costs, and penalties. In November, the Enforcement Watch covered an action filed by the CFPB against a fifth Virginia pawnbroker. Enforcement Watch will continue to monitor these actions, and the CFPB’s enforcement of other consumer finance laws.