A federal consumer watchdog group has fined one Georgia-based company $15 million for predatory lending practices. TitleMax, which is headquartered in Savannah, offers short-term loans — at exorbitant interest rates — in exchange for a lien on the title of the borrower’s car.
In its order, the Consumer Financial Protection Bureau said TitleMax had intentionally evaded laws meant to protect military families from predatory lenders and, separately, charged illegal insurance fees to more than 17,000 customers.
The federal regulator found that the company used deceptive means, including falsifying information, to issue 2,670 so-called title loans over a five-year period to military members or their dependents in violation of the Military Lending Act and in contravention of the company’s own internal guidelines.
The operations of TitleMax, the nation’s largest title lender and the dominant industry player in Georgia, have been the subject of a yearlong investigation by The Current and ProPublica. The news organizations revealed for the first time the scope and scale of the industry in the state. The stories also revealed TitleMax’s questionable practices in Georgia, which has one of the most permissive local regulatory environments for the title lending industry. Due to a loophole in state law, title lenders there are allowed to charge triple-digit interest rates that would be illegal for any other financial lender.
The 53-page CFPB Consent Order repeatedly castigated the company for a lack of meaningful internal oversight in its pursuit of revenue. Federal law caps annual interest rates at 36% for financial products sold to military members and their families. TitleMax, which counts more than 293,000 customers nationwide and posted $910 million in revenue in 2019, emphasizes in its own internal training manuals that…
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