On May 8, 2017, the North Carolina Attorney General (“NC AG”) announced that it had obtained a final judgment against an auto title lender and two of its employees in North Carolina State Court.
The NC AG alleged that the lender solicited loans online, and required consumers to secure the loans with their vehicle titles. If a consumer missed a payment, the lender would repossess the consumer’s vehicle. However, the lender was not licensed to make loans in North Carolina, and did not disclose all of the loan terms until after a consumer had taken out the loan. The lender allegedly charged interest rates of 161 to 571 percent. The NC AG alleged that the lender made illegal loans to more than 700 individuals in North Carolina. Loan amounts ranged from $800 to $7,000.
The NC AG previously had obtained a temporary restraining order and preliminary injunction against the lender. After the lender did not appear in court, the NC AG froze $178,000 in assets to secure restitution funds.
Under the State Court’s final judgment, all loans made by the lender are void and cancelled, the lender is prohibited from making any loans in North Carolina, the $178,000 will be distributed as restitution, the lender’s liens are cancelled, any consumers who have vehicles that were used as collateral for the loans can receive new titles, and a civil penalty of $3.5 million was entered against the lenders.