The Consumer Financial Protection Bureau on Friday announced it had filed a lawsuit against a national chain of pawnshops, accusing it of violating the Military Lending Act (MLA) by imposing interest rates that were higher than allowed by law, including provisions requiring mandatory arbitration — also prohibited, and for not making required loan disclosures. The lawsuit marks the second time that the CFPB has engaged in an enforcement action against this particular company, further illustrating Director Rohit Chopra’s assurances to go after repeat offenders.
A copy of the complaint, filed against FirstCash, Inc., and Cash America West, Inc., can be accessed by clicking here. The CFPB is seeking to permanently prohibit the company from collecting debts that were created under the loans in question, to correct inaccurate information furnished to credit reporting agencies, as well as damages, restitution and other forms of monetary relief to consumers.
“FirstCash is a repeat offender and cheated military families over and over again,” Chopra said, in a statement. “FirstCash and Cash America West gouged military families and robbed them of their rights to go to court.”
FirstCash operates more than 1,000 pawnshops nationwide, while Cash America West, a subsidiary of FirstCash, operates pawnshops in Arizona, Nevada, Utah, and Washington.
The company is accused of making more than 3,600 pawn loans during a four-year period that included interest rates higher than the 36% allowed under the MLA. In fact, some of the loans had interest rates higher than 200%. The loans also included mandatory arbitration clauses, which are prohibited under the MLA, and the company failed to make all the required disclosures under the statute.
The CFPB pointed out that the 3,600 loans in question represented a sample of loans and that the likely number of loans that violated the MLA was much higher.
In 2013, the CFPB took action against Cash America International, of which FirstCash is a successor and subject to that enforcement order. That order prohibited the company from any further violations of the MLA and is still in effect.
