The Consumer Financial Protection Bureau has reached a $9 million settlement with FirstCash and 19 of its subsidiaries, resolving allegations the company violated the Military Lending Act by issuing unlawful pawn loans to active-duty servicemembers and their families. The proposed settlement, which needs to be approved by a federal judge, will end an enforcement action that began back in 2021 when the company was sued by the Bureau.
🧾 The Big Picture: The CFPB accused the company of:
- Charging servicemembers more than the 36% APR cap set by the Military Lending Act (MLA),
- Requiring arbitration in loan agreements (which is barred by the MLA),
- Failing to make required loan disclosures,
- Violating a prior 2013 CFPB order against a predecessor entity.
Under the terms of the stipulated judgment FirstCash will:
- Set aside $5 million (or more) to provide redress to impacted borrowers,
- Pay a $4 million civil money penalty to the CFPB’s victims relief fund,
- Offer an MLA-compliant pawn loan product going forward or follow a regulatory safe harbor process for screening covered borrowers.
🔍 Details from the Order: If approved by the court, the order would require:
- Redress to impacted servicemembers, including full refunds of interest, fees, and principal.
- Compliance with MLA provisions for the next five years, including caps on APR, mandatory disclosures, and a prohibition on arbitration clauses.
- Semi-annual compliance assessments, board-level oversight, and mandatory employee training on MLA compliance.
- Use of a strict intake procedure to determine covered borrower status, with POS system lockouts to prevent noncompliant loans from being issued.
- Signage and disclosures clearly displayed in stores and included in contracts.
🗣️ Company Response: In a statement, FirstCash CEO Rick Wessel said:
“While we disagree with the CFPB’s allegations… we believe that agreeing to this settlement and putting this matter behind us is the best path forward for the Company.”
FirstCash said the estimated total financial impact will be reflected in its second-quarter 2025 financials.
