TMX Finance LLC pays $9M for lending UDAAP violations
The Consumer Financial Protection Bureau has announced an action against TitleMax parent company TMX Finance LLC for luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs. The lender also used unfair debt collection tactics that illegally exposed information about debts to borrowers’ employers, friends, and family.
TMX Finance, which is based in Savannah, Ga., is one of the country’s largest auto title lenders, with more than 1,300 storefronts in 18 states. TMX Finance offers title and personal loans through a host of state subsidiaries under the names TitleMax, TitleBucks, and InstaLoan. Single-payment auto title loans are usually due in 30 days, with some carrying an annual percentage rate of up to 300 percent. To qualify for the loan, a consumer must bring in a lien-free vehicle and its title as collateral.
The CFPB found that store employees, as part of their sales pitch for the 30-day loans, offered consumers a “monthly option” for making loan payments. They then offered consumers a “Voluntary Payback Guide” that showed how to repay the loan with smaller payments over a longer time period. But the guide and sales pitch did not explain the true cost of the loan if the consumer renewed it multiple times. TMX Finance employees also unlawfully exposed sensitive personal information during “field visits” to consumers’ homes, references, and places of employment in attempts to collect debt.
The Bureau ordered TMX Finance to stop its unlawful practices and pay a $9 million penalty.