RICHMOND, Va. (Legal Newsline) - Virginia Attorney General Ken Cuccinelli announced a nearly $10,000 settlement on Friday with a Northern Virginia auto title lender to resolve allegations of making illegal car title loans.
Brar Inc. allegedly made illegal car title loans that violated Virginia motor vehicle title loan laws, consumer finance laws and the state's Consumer Protection Act. Under the terms of the agreement, Brar Inc. will return close to $10,000 to eligible consumers.
"I am pleased we were able to reach a fair agreement with Brar that provides refunds and other relief to affected Virginians," Cuccinelli said. "The settlement will return to consumers all interest they paid on the illegal loans."
Between Jan. 28, 2010, and Dec., 2010, Brar engaged in business from its Manassas office as a motor vehicle title loan lender without holding a required license from the State Corporation Commission. The company allegedly made 26 loans between Oct. 1, 2010, and Dec. 23, 2010, and three loans prior to that time period. Brar allegedly made closed-end loans secured by motor vehicle titles to 29 consumers in all.
Interest rates that Brar charged borrowers allegedly significantly exceeded the legal limits of the state and did not come within any exemptions under state motor vehicle title loan or consumer finance laws. Unless a lender is licensed or exempt, lenders may not charge and receive interest of more than 12 percent per year on consumer loans. During Brar's unlicensed period, the company allegedly charged consumers annual percentage interest rates of between 180 and 240 percent.
Under the terms of the settlement, Brar must make more than $9,800 worth of refunds to 25 borrowers, no longer collect interest or any other fees or amounts more than the initial principal loan amount borrowed from a consumer who received a loan during the unlicensed period, return vehicle titles and appropriate lien releases to borrowers who received loans during the unlicensed period and later made payments exceeding or equaling the loan's initial principal amount, not repossess vehicles belonging to borrowers who obtained loans during the unlicensed period and pay Cuccinelli's office $3,000 for attorney fees, costs and expenses.
The $9,800 paid as part of the settlement represents the amount borrowers paid in excess of the principal amounts of their loans. In addition, Brar has agreed to a permanent injunction that prevents the company from violating Virginia laws applicable to motor vehicle title loan lenders, consumer finance companies and the Virginia Consumer Protection Act. Brar may not receive interest above 12 percent on consumer loans unless the business is licensed and/or exempt by law.
The consent judgment has been filed with the Richmond Circuit Court for approval. The State Corporation Commission previously concluded a separate matter with Brar as part of an April 26, 2011, settlement. The previous settlement required a civil penalty for the related matter but did not include compulsory restitution to be made to affected borrowers.