On February 2, the CFPB and the Attorney General of Virginia filed a lawsuit and proposed stipulated final judgment against a Virginia pawnshop for deceiving consumers about the actual annual costs of its loans. This complaint is one of many similar lawsuits filed recently against several Virginia pawnbrokers (see November 11 and December 23 Infobytes posts). The complaint alleges violations of TILA, the Dodd-Frank Act, Virginia’s pawnbroker statutes, and the Virginia Consumer Protection Act. The proposed stipulated final judgment orders the company to pay over $56,000 in restitution, forfeit over $17,000 in ill-gotten gains, and pay a $5,000 civil penalty.
On February 2, the CFPB announced a consent order and stipulation in an enforcement action against one of five Arizona-based title lenders under investigation for violations of TILA (see September 23 InfoBytes post). The terms of the February consent order and stipulation include a $10,000 civil money penalty as well as a mandatory requirement that the lender refrain from further violations of TILA and create a comprehensive compliance plan to ensure that its advertising practices for its title lending business conform to all applicable federal consumer financial laws and the terms of the consent order. On November 1 and December 20, 2016, the CFPB posted consent orders and stipulations against three of the other five title lenders (2016-CFPB-0018, 2016-CFPB-0019, 2016-CFPB-0021). The Bureau is still negotiating an agreement with the fifth title lender.
On December 23, the CFPB announced that it is amending the official commentary interpreting Regulation Z (Truth in Lending) to reflect a change in the asset size exemption thresholds required to establish an escrow account for higher-priced mortgages under Reg. Z. Under the amended commentary, the exemption threshold is adjusted to increase to $2.069 billion from $2.052 billion.
On December 19, the CFPB announced it had filed enforcement actions (3:16cv987, 3:16cv988, 1:16cv1566, 1: 16cv1567) in federal district court against four Virginia pawnbrokers for misleading customers through deceptively low annual percentage rates that intentionally omit or hide certain fees and charges. In each Complaint, the Bureau alleges both TILA violations and unfair, deceptive, or abusive acts or practices under Dodd-Frank and the CPA. The complaints seek injunctive relief ordering the pawnbrokers to stop the allegedly illegal practices, restitution for consumers, and statutory penalties.
In a letter sent to CFPB Director Richard Cordray on December 1, a group of Republican members of Congress expressed concern about the Bureau’s proposal regarding payday, vehicle title, and certain high-cost installment loans. The letter observes that CFPB’s proposal “attempts to further regulate an industry that is already highly regulated by nearly a dozen federal laws including the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and the Electronic Funds Transfer Act.” Specifically, the letter contends that the CFPB’s framework will effectively preempt existing statutory and regulatory frameworks and/or eliminate regulated small dollar credit products from the market, thereby leaving consumers without access to credit or forcing them to seek “riskier, illegal” forms of credit.