![]() ![]() ![]() ![]() The dangers of title and other predatory loans to military families were laid out in a 2006 Department of Defense report that noted that predatory lending “undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.” The response of Congress was to pass the Military Lending Act, which took effect in 2007. The nature of these loans causes many borrowers to face unaffordable payments, and find they must choose among defaulting, reborrowing, or skipping other financial obligations like rent, food, or medical care. For these loans, borrowers are required to put up their car or truck title for collateral. ![]() The CFPB ordered the company to stop its unlawful practices and pay a $9 million penalty.Īuto title loans are small dollar loans with expensive charges and short terms of usually 30 days or less. The CFPB also found that the company engaged in illegal high pressure debt collection practices. In the 2016 Order, the CFPB 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. TitleMax has been under a CFPB Order since September 26, 2016, for its lending and debt-collection practices. TitleMax claims to have almost 4,000 employees and to serve thousands of people every day. TitleMax is privately owned, and currently has more than 1,000 locations in 18 states: Alabama, Arizona, Delaware, Florida, Georgia, Idaho, Illinois, Kansas, Mississippi, Missouri, Nevada, New Mexico, South Carolina, Tennessee, Texas, Utah, Virginia, and Wisconsin. According to TitleMax, consumers can receive a title loan of up to $10,000. TitleMax’s headquarters is in Savannah, Georgia, and it is engaged in the business of extending short-term, high-cost consumer loans that are secured by borrowers’ vehicle titles. TitleMax is made up of TMX Finance LLC and numerous subsidiaries across the United States with both in-person and online locations. “Our legal action is the CFPB’s first against a nonbank lender for providing title loans to military families.” “The CFPB’s order stops TitleMax’s illegal predatory lending to military families – sometimes even taking steps to hide evidence of its wrongdoing,” said CFPB Director Rohit Chopra. The CFPB’s 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 CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. TitleMax tried to hide their unlawful activities by, among other things, altering the personal information of military borrowers to circumvent their protected status. The CFPB found that TitleMax violated the Military Lending Act by extending prohibited title loans to military families and, oftentimes, by charging nearly three times over the 36% annual interest rate cap. – Today, the Consumer Financial Protection Bureau (CFPB) took action against a web of corporate entities operating under TMX Finance, broadly known as TitleMax, for violating the financial rights of military families and other consumers in providing auto title loans. ![]()
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