On July 19, 2018, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a lender and its subsidiaries, resolving allegations that the company violated the Consumer Financial Protection Act (CFPA) and Truth in Lending Act (TILA).
The lender and its subsidiaries are financial services companies headquartered in Alabama that own and operate approximately 100 retail lending outlets in Alabama, Mississippi, and South Carolina. The companies provide, service, and collect on high-cost, short-term loans, including payday, title pledge, and installment loans to consumers.
The CFPB found that the companies failed to disclose finance charges associated with their auto title loans in Mississippi, in violation of the CFPA. The CFPB further found that the companies used advertisements that failed to disclose the annual percentage rate of their auto title loans and other information, in violation of TILA.
Pursuant to the consent order, the companies are prohibited from misrepresenting the costs and terms of their loans. The order enters a judgment of $1,522,298 against the companies — the total amount of interest payments made by consumers in excess of the disclosed finance charge. Full payment of this amount will be suspended after the companies pay $500,000 to the CFPB. The CFPB will use the funds for redress to injured consumers. The companies were also assessed a civil money penalty in the amount of $1.