BUFFALO, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced agreements on Tuesday with 10 businesses that will significantly limit the marketing of title loans, a type of payday loan pitched to consumers with poor credit.
Under the terms of the agreements, the 10 businesses agreed not to repossess vehicles at the request of title loan companies. Schneiderman reached agreements with the Grandville, Mich.-based Loss Prevention Services LLC; the Buford, Ga.-based Victory Recovery Services Inc.; the Burnt Hills, N.Y.-based Tri-City Auto Recovery Inc., doing business as TCAR Recovery & Remarketing Services; the New Windsor, N.Y.-based Priority Recovery Inc.; the Maple Grove, Minn.-based Minnesota Repossessors Inc.; the Plainview, N.Y.-based Empire Auto Recovery Inc.; the Carlsbad, Calif.-based Del Mar Recovery Solutions Inc.; the Buffalo, N.Y.-based Buffalo Auto Recovery Service LLC; the Buffalo, N.Y.-based ALSCO of Buffalo; and the Rochester, N.Y.-based Advanced Recovery of New York Inc.
Payday lenders market title loans as a fast way to obtain cash, requiring borrowers to pledge their motor vehicles as collateral. After paying only the interest on a monthly basis, consumers must pay a balloon payment for an amount that can exceed the entire principal of the loan. If consumers cannot make the final payment, the title loan company repossesses the consumer's vehicle and sells it.
When repossessing vehicles, national companies take repossession orders centrally and pass on orders to repossess the vehicles to local businesses on their networks. The 10 businesses party to the agreements will not accept the orders from title loan companies.
"I applaud these companies for agreeing to stop obeying orders from predatory title-loan companies that take advantage of unsuspecting New Yorkers," Schneiderman said. "Any other business that repossesses the vehicles of New Yorkers based on illegal title loans should recognize that my office will not tolerate this kind of behavior."