The Consumer Financial Protection Bureau (CFPB) rocks!
It just fined the parent company of TitleMax, a whopping $9 million for misleading consumers, regarding the terms and costs of their high-priced loans, The Hill reported today.
CFPB says that TitleMax also used illegal debt collection tactics.
“They lured consumers into more expensive loans with information that hid the true costs of the deal,” CFPB Director Richard Cordray said in a statement. “They then followed up with intrusive visits to homes and workplaces that put consumers’ personal information at risk.”
“About time.” Says Richard West, founder of West Law Offices, the top bankruptcy and financial recovery Law Office in Southern Ohio.
“I’ve seen these practices ignored by lawmakers for years, and its high time that some action was taken against these unscrupulous practices,” says West.
“Often the only way anyone keeps their job it the car that gets them there each day. When hard times hit, title loans can sometimes be a lifesaver, but also can threaten the financial life of a family,” says West.
“What I often do, “ West explains, “is turn these loans “upside down” on these creditors. I put them into a chapter 13 bankruptcy, and knock the interest rate down to 4.75% and stretch the payments out over up to 60 months.”
Chapter 13 turns the tables on TitleMax type loans. But bankruptcy is not possible or advisable in all cases, so I am glad to see some action being taken to help all of us who fight the horrible highway robbery that these loans remind me of.
The CFPB said it found store employees, as part of their sales pitch for a 30-day loan, were offering consumers a “monthly option” for making loan payments and giving out a “Voluntary Payback Guide” that showed how to repay the loan with smaller payments over a longer time period. However, the guide and sales pitch neglected to explain the true cost of the loan if the consumer renewed it multiple times.