On June 2, 2020, the CFPB and a Tennessee-based payday and installment-loan lender agreed to a consent order for alleged violations of the Consumer Financial Protection Act of 2010 (CFPA), the Truth in Lending Act (TILA) and Regulation Z under TILA.
The lender operates over 150 stores in eight states, including Mississippi. In Mississippi, auto-title loans are required to be structured as a single-payment transaction with a 30-day maturity date. However, the lender included separate documents which it called an “Amortization Schedule.” Consumers who provided payments per the Amortization Schedule paid ten equal payments, however, they had to pay a finance charge per payment which was considerably higher than charges noted in the TILA disclosure within the Title Pledge Agreement Transaction Form. The discrepancies in fee totals was not disclosed to consumers. This misrepresentation is a violation of the CFPA as well as Regulation Z, which requires that disclosures are made in writing and must be made “clearly and conspicuously” and must reflect “the terms of the legal obligation between the parties.”
Further, the consent order states that the lender failed to refund consumers who overpaid and that the lender regularly made collection calls to the consumers at work or would regularly call their references.
The Order imposes a total of $3,540,517.10 in penalties against the lender. However, the Order includes a stipulation that the full payment will be suspended as long as the lender pays $2 million to the Bureau within ten days. The order also includes a $1 civil money penalty. Additionally, the lender is subject to various recordkeeping, reporting, and compliance monitoring requirements.