CFPB Sues Pawn Lenders for MLA Violations
Earlier this month, the Consumer Financial Protection Bureau (CFPB) sued FirstCash, Inc. and Cash America West, Inc., two pawn lenders that the Bureau alleges violated the Military Lending Act (MLA) by charging active-duty servicemembers and their families higher than the allowable 36 percent annual percentage rate on pawn loans.
“FirstCash is a repeat offender and cheated military families over and over again,” CFPB Director Rohit Chopra said in a statement. “FirstCash and Cash America West gouged military families and robbed them of their rights to go to court.”
The CFPB alleged that from June 2017 to May 2021, FirstCash and Cash America West violated the MLA by making more than 3,600 pawn loans at annual rates higher than 36 percent from stores in Arizona, Nevada, Utah, and Washington. According to the Bureau, the loan APRs often exceeded 200 percent.
Additionally, the Bureau alleged that the companies violated the MLA by making borrowers sign loan contracts that prohibited them from their ability to sue and did not include full loan disclosures.
In 2013, Congress gave the CFPB enforcement authority over the MLA, which is one of few federal lending laws that include a ban on forced arbitration and an interest rate cap. The Bureau is seeking an injunction to halt the alleged illegal conduct, and to rectify the issue for affected consumers.
FirstCash, Inc. is a non-bank corporation in Fort Worth, Texas with wholly owned subsidiaries that operate more than 1,000 pawn shops in the U.S. Cash America West, Inc. is a wholly owned subsidiary of FirstCash, operating pawn shops in Arizona, Nevada, Utah, and Washington.