Five automotive title lenders based out of Arizona are being sued by the Consumer Financial Protection Bureau for allegedly failing to disclose annual percentage rates in online advertising, according to a bureau press release today.
Auto Cash Leasing LLC, Interstate Lending LLC, Oasis Title Loans LLC, Phoenix Title Loans LLC, and Presto Auto Loans Inc. have all been sued under five separate administrative law suits issued by the CFPB seeking civil monetary penalties and orders requiring the companies to correct their practices. These auto title lenders secure loans in which the vehicle serves as collateral. A borrower who cannot repay an initial title loan must re-borrow or risk losing the title to their vehicle.
The lawsuits allege these companies starting from at least July 6 violated the Truth in Lending Act by advertising periodic interest rates for the loans without also displaying the corresponding annual percentage rate. The agency gave an example in the release of an undisclosed lender asking consumers to take its advertised periodic rate and multiply it by 12, the number of months in a year. But that calculated figure was not identified as the annual rate.
This case will be tried by an Administrative Law Judge from the Bureau’s Office of Administrative Adjudication and the director of the CFPB, Richard Cordray, will issue a final decision based on the judge’s recommendations.
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