March 3, 2023

CFPB Shuts Down Loan Scams Targeting Military Families

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

The CFPB is fighting back against what it alleges to be unlawful predatory lending practices targeting military families in violation of the Military Lending Act (MLA).
The Bureau issued a consent order against TMX Finance LLC, which operates as TitleMax, for violating the MLA, the Consumer Financial Protection Act (CFPA), and the Truth in Lending Act (TILA) through various predatory loan practices, including extending prohibited title loans to military families that in some cases charged nearly three times the 36% military annual interest rate cap. The CFPB alleges that TitleMax tried to hide some of the prohibited loans by altering the personal information of military borrowers to obscure their protected status. Under the terms of the consent order, TitleMax must pay a $10 million civil penalty and $5.05 million in restitution to consumers, and must implement a plan to prevent and detect future illegal lending practices.
The Bureau also took action against RMK Financial Corporation, a mortgage lender doing business as Majestic Home Loans, for allegedly deceptive advertisements sent to military families in violation of the CFPA, TILA, and the Mortgage Acts and Practices Advertising Rule. The advertisements allegedly used fake logos for the U.S. Department of Veterans Affairs and the Federal Housing Administration and other elements to falsely imply that RMK was affiliated with the U.S. government. Because the CFPB had previously taken action against RMK for similar conduct in 2015, the consent order permanently bans RMK from engaging in mortgage lending activities and also requires the company to pay a $1 million fine.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.