TMX Finance LLC
On February 23, 2023, the Bureau issued an order against TitleMax parent company TMX Finance LLC, which extends consumer loans that are secured by the title to the borrower’s car. The Military Lending Act (MLA) contains a number of protections for active-duty servicemembers, their spouses, children, and other dependents, defined as “covered borrowers.” Among other protections, the MLA prohibits nonbank creditors from using vehicle titles to secure loans to covered borrowers. The Bureau found that TitleMax violated the MLA by extending thousands of title loans to covered borrowers; extending loans that exceeded the MLA’s 36% Military Annual Percentage Rate (MAPR) cap; failing to make disclosures required under the MLA; extending loans to covered borrowers with MLA-prohibited arbitration clauses; and extending loans to covered borrowers with onerous notice requirements. The Bureau also found that TitleMax engaged in unfair acts or practices in violation of the Consumer Financial Protection Act of 2010 (CFPA) by charging borrowers for an insurance product that provided no coverage on about 15,000 loans. The Bureau further found that in doing so, TitleMax understated the finance charges and annual percentage rates of those loans, violating the Truth in Lending Act and CFPA. The order requires TitleMax to stop its unlawful activities, pay $5,050,000 in consumer redress, and pay a $10,000,000 penalty.