On June 2, 2020, the CFPB and a Tennessee-based payday and installment lender agreed 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 must be structured as a one-time payment transaction with a 30-day term. However, the lender enclosed separate documents which he called the “amortization plan”. Consumers who made payments according to the amortization schedule made ten equal payments but had to pay a funding fee per payment that was significantly higher than the fees shown in the TILA disclosure on the property deposit agreement transaction form. The discrepancies in the fee sums were not communicated to the consumers. This misrepresentation is in violation of the CFPA and Regulation Z, which requires written disclosure that is “clear and prominent” and “reflects the terms of the legal obligation between the parties”.
In addition, the consent order states that the lender has not refunded consumers who overpayed and that the lender has made regular collection calls to consumers at work or has regularly checked their references.
The order imposes a total of $ 3,540,517.10 in penalties on the lender. However, the ruling includes a provision that full payment will be suspended so long as the lender pays the bureau $ 2 million within ten days. The order also includes a $ 1 civil fine. Additionally, the lender is subject to various record keeping, reporting and compliance monitoring requirements.