Maryland orders vehicle title lender to pay $2.2 million
On February 21, the Maryland attorney general announced the issuance of a final order against a vehicle title lender, its owner, and related businesses (defendants) for making unlicensed and usurious consumer loans in violation of the Maryland Consumer Protection Act. According to the AG’s Consumer Protection Division (Division), the defendants offered consumers short-term, high-interest loans secured by a consumer’s motor vehicle title. The defendants allegedly kept the vehicle’s title, and, if the consumer failed to make a payment on the loan, would repossess or sell the vehicle. The Division claimed that these transactions, which the defendants claimed were pawn transactions, were actually consumer loans under Maryland law and carried interest rates of 360 percent. Under the terms of the final order, all loans the defendants made to Maryland consumers are void and unenforceable. The defendants are also ordered to, among other things, permanently cease engaging in unlicensed lending activities in the state and may not make loans that exceed the maximum allowed rate of interest, charge fees that are not permitted under state law, repossess secured vehicles or other personal property, or operate without requisite surety bonds. In addition, the defendants may not repossess consumers’ vehicles and must return any repossessed vehicles still in their possession. Finally, the defendants must pay at least $2.2 million in restitution to affected consumers, a $1.2 million civil penalty, a $50,000 claims procedure fee, and $73,000 in costs.