Bryan Cohen May 9, 2014, 7:43pm

LITTLE ROCK, Ark. (Legal Newsline) - Arkansas Attorney General Dustin McDaniel filed a consumer protection lawsuit on Thursday against a Lonoke County pawnbroker who allegedly marketed illegal auto title loans with interest rates of more than 300 percent.

Toby Troutman, the owner of TRT Investments Inc., doing business as US Pawn and Loan, allegedly violated the Arkansas Deceptive Trade Practices Act by marketing the loans to dozens of Arkansas consumers. Auto title loans, also known as title pawns, are short-term, high-interest loans in which the borrower provides the lender with the title and a key to his or her vehicle as collateral. If the borrower fails to meet payment obligations, the lender keeps the right to seize or sell the vehicle.

US Pawn and Loan allegedly engaged in at least 86 title loan transactions with at least 63 Arkansans. Troutman allegedly charged an effective interest rate of higher than 300 percent on the loans.

"No matter whether it's a high-interest title loan or a payday loan, these types of lending activities are bad for consumers and illegal in Arkansas," McDaniel said. "I have made it a priority in my office to protect Arkansans against usurious lending practices."

The lawsuit alleged Troutman tried to disguise the nature of the title loans as the sale of the borrower's vehicle with the simultaneous sale or lease of the same car back to the consumer.

The suit requests that the Pulaski County Circuit Court require US Pawn and Loan to cancel consumers' debt obligations, return vehicle titles to their owners and pay restitution, attorney fees and civil penalties.

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