This makes it difficult, if not impossible, for a consumer to compare costs for renewing the loan over a given period, The guide does not calculate fees or the total cost to consumers of repeatedly renewing the loan instead of repaying it in 30 days. The guide and sales pitch distracted consumers from the fact that repeatedly renewing the loan, as encouraged by TMX Finance employees, would dramatically increase the loan’s cost. Presented consumers with misleading information about loan terms: TMX Finance employees asked consumers how much they wanted to pay each month or how long they wanted to take to pay off the 30-day loan.Specifically, the Bureau found that TMX Finance:
Today’s order addresses a period from Jto the present. TMX Finance employees also unlawfully exposed sensitive personal information during “field visits” to consumers’ homes, references, and places of employment in attempts to collect debt. But the guide and sales pitch did not explain the true cost of the loan if the consumer renewed it multiple times.
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They then offered consumers a “Voluntary Payback Guide” that showed how to repay the loan with smaller payments over a longer time period. The CFPB found that store employees, as part of their sales pitch for the 30-day loans, offered consumers a “monthly option” for making loan payments. Single-payment auto title loans are usually due in 30 days, with some carrying an annual percentage rate of up to 300 percent. To qualify for the loan, a consumer must bring in a lien-free vehicle and its title as collateral. TMX Finance offers title and personal loans through a host of state subsidiaries under the names TitleMax, TitleBucks, and InstaLoan. TMX Finance, which is based in Savannah, Ga., is one of the country’s largest auto title lenders, with more than 1,300 storefronts in 18 states. “TMX Finance lured consumers into more expensive loans with information that hid the true costs of the deal,” said CFPB Director Richard Cordray. "They then followed up with intrusive visits to homes and workplaces that put consumers’ personal information at risk. Today we are making it clear that these actions were unacceptable and illegal.” The Bureau ordered TMX Finance to stop its unlawful practices and pay a $9 million penalty.
The lender also used unfair debt collection tactics that illegally exposed information about debts to borrowers’ employers, friends, and family. The Consumer Financial Protection Bureau (CFPB) today took action against TitleMax parent company TMX Finance LLC for luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs.
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