02/07/17 – The Consumer Financial Protection Bureau (CFPB) and the Attorney General of Virginia have taken action against a pawnbroker for deceiving consumers about the actual annual costs of its loans.
The Virginia-based pawnbroker issues closed-end loans secured by personal property and charges consumers a finance charge on their loans. The charge is made up of four fees: “maintenance,” “interest,” “storage,” and “clerical.” The CFPB found that since at least May 2014, the defendant misled its customers about the costs of their loans by disclosing deceptively low annual percentage rates (APRs) that did not reflect all of the fees and charges tacked onto the loans. These inaccurate disclosures in many cases understated the true annual percentage rate by as much as half of the actual cost.
The CFPB and the Virginia Attorney General alleged that the company broke the law by misstating the charges associated with pawn loans. The CFPB and the Virginia Attorney General have filed a complaint and a proposed consent order in federal court, alleging that the company’s actions violated the Truth in Lending Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Virginia’s pawnbroker statutes, and the Virginia Consumer Protection Act.
Under the proposed consent order, the company would be required to pay over $56,000 in restitution to approximately 1,000 consumers, forfeit over $17,000 in ill-gotten gains, and pay $5,000 to the Bureau’s Civil Penalty Fund.