The Consumer Financial Protection Bureau took action against TitleMax parent company TMX Finance LLC — one of the country’s largest auto title lenders — for “luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs,” the CFPB announced today.
The Savannah, Ga.-based lender had been ordered to stop its unlawful practices and pay a $9 million penalty, according to a bureau press release.
“TMX Finance lured consumers into more expensive loans with information that hid the true costs of the deal,” CFPB Director Richard Cordray said in the release. “They then followed up with intrusive visits to homes and workplaces that put consumers’ personal information at risk. Today we are making it clear that these actions were unacceptable and illegal.”
TMX Finance has more than 1,300 storefronts in 18 states, and offers title and personal loans through a host of state subsidiaries under the names TitleMax, TitleBucks, and InstaLoan. Single-payment auto title loans are usually due in 30 days, with some carrying an annual percentage rate of up to 300%, according to the CFPB. To qualify for the loan, a consumer must bring in a lien-free vehicle and its title as collateral.
Today’s order addresses a period from July 21, 2011, to the present. Specifically, the bureau found that TMX Finance “presented consumers with misleading information about loan terms,” and “exposed information about consumers’ debts to co-workers, neighbors, and family members.”
Under the order issued by the CFPS, TMX Finance will be required to:
- Stop abusive loan-repayment policies: TMX Finance cannot use any payback guide or similar document and cannot misrepresent the terms, length, or cost of the loan. It also cannot encourage consumers to take longer to pay than the term of the original loan.
- Stop intrusive visits to consumers’ homes or workplaces: TMX Finance cannot make in-person visits to the homes of consumers or their workplaces to collect payments. To make sure the company follows through, TMX Finance must submit a compliance plan for the bureau’s approval within 60 days of the order.
- Pay a $9 million penalty: TMX Finance will pay a penalty of $9 million to the CFPB’s Civil Penalty Fund.
Without admitting any of the CFPB’s findings of fact or conclusions of law, TMX has agreed to pay a civil money penalty of $9 million as part of the settlement, the company said in a press release. The payment will be reflected in the Company’s quarterly financial statements for the quarter ending September 30.
“This resolution of the CFPB’s investigation addresses and mitigates the CFPB’s identified concerns while allowing us to continue meeting the urgent financial needs of our customers,”Otto Bielss, president of the TMX Finance Family of Companies, said in the release.” Many of our customers have nowhere else to turn when they suffer from short-term financial setbacks like medical emergencies or home repairs, and we are committed to remaining a reliable source of credit for them when the need arises.”
To the CFPB’s order in full, click here.
