Auto title lenders settle Washington D.C. lawsuits
"I commend the Office of attorney general for their hard work on this settlement," Mayor Adrian Fenty said. "The actions by CashPoint and Loan Max were inexcusable and my administration will continue to pursue companies who prey on the District's vulnerable consumers to gain profit."
Loan Max and CashPoint, money lenders that secure consumer loans through the borrower's motor vehicle title, are alleged to have violated the act from November 2007 through May 2009, issuing hundreds of loans to consumers in Washington from their Virginia stores since November 2007.
Interest rates on these short-term loans were more than 300-percent APR, far exceeding the district's statutory maximum of 24 percent APR.
Loan Max and CashPoint, which solicited consumers from the district to visit the companies' Virginia stores through radio and television commercials, have agreed to provide full refunds on both the interest charged above the 24 percent statutory cap and for all interest charged and paid by residents of Washington from November 24, 2007, through May 2009.
More than 650 consumers are eligible for the refunds, which amount to hundreds of thousands of dollars.
"I am very pleased at how quickly Loan Max and Cash Point moved to resolve our concerns as to their business practices with respect to District consumers," Attorney General Peter Nickles said. "Loan Max and CashPoint cooperated fully with my office throughout these investigations and this office's vigorous enforcement of our consumer laws has resulted in these substantial refunds."
Under terms of the settlement, the two companies will return all repossessed vehicles from consumers that are still in the possession of the companies. For consumers' cars that have already been sold at auction, the companies have agreed to refund to the owners the full amount for which the cars were sold. Substantial contributions will also be made by the two auto title lenders to the District's Consumer Protection Fund, which will be used for consumer protection and education purposes.
Both companies have also agreed to cease making loans in the district.