California Car Title Lender Hall of Shame

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

Car Title report

Similar to payday loans, car title loans also generate a LOT of complaints- and create a lot of financial damage for consumers who use them.  In fact, new research from the Consumer Financial Protection Bureau finds that 1 in 5 car title loans will ultimately result in the borrower having their car repossessed. As Liana Molina, director of Community Engagement at the California Reinvestment Coalition commented: “At least car thieves don’t take half your income before stealing your car.”

The compilation below is similar to our Payday Lender Hall of Shame. We’ll be adding in stories about predatory car title lending below.

If you haven’t yet, you’ll want to weigh in on the CFPB’s new proposal to more strongly regulate payday, car title, and installment lenders. We have a website where you can do it: CFPB Comments.   We know the industry will be submitting a lot of comments about protecting their profits (at the expense of consumers), so it’s important the CFPB hear from you!

Beware of Payday Loan Wolves My husband and I scrambled to call banks, lawyers, and anyone we thought could help save this family’s house. Unfortunately, we were too late. The home had been foreclosed on and sold, and now she was about to lose her car, which she needed to get to work every day. We decided to go with her to the store to see if we could help, but there was nothing to be done. The lender that offered her help in her time of need set her up to fail.  June 30, 2016.

Borrowing with auto title loan puts vehicle at risk Liana Molina explains that in comparison to shady car title lenders, at least car thieves don’t take half your income before stealing your car. Newsday. Sheryl Nance-Nash.June 11, 2016.

“A few days later, this headline appeared in Utah: Pleasant Grove woman dies in crash while fleeing repo man, police say. The article explains: “Ashleigh Holloway Best, 35, was estimated to be traveling at least 70 mph on a 35 mph road when she smashed into a tree about 12:20 a.m. at 682 N. 100 East. She had to be extricated from the vehicle and was pronounced dead at the scene, said Pleasant Grove Police Lt. Britt Smith.” Why was she travelling this fast? She was being pursued by a repo man, who was trying to repossess her car on behalf of TitleMax, a car title lender.” Daily Kos: Predatory Lending is Literally Killing People (May 26, 2016)

“Like the idea of paying triple-digit interest rates on a loan, forking out more dough in additional fees and watching the repo man tow away your car? Auto title lenders have got just the thing.” CBS MoneyWatch: Another loan to steer clear of (May 18, 2016)

How does the debt trap work?  Watch this PBS NewsHour episode about T.J. McLaughlin, who had to take some time off work after a medical problem.  Short on money for bills, he borrowed $1,200 from a car title lender (North American Title Loans), at 300% interest rate.  But when he lost his job and was unable to make the payments on this loan, they took his car.

Compilation of Payday Loan Legal Settlements

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.
PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

CRC is starting to compile payday loan settlements- if we’ve missed any, please send them to us: SCOFFEY AT CALREINVEST.ORG and we’ll post em here.  And, Advance America has its own post about all their settlements. You can read it here:  ADVANCE AMERICA PAYDAY LENDER SETTLEMENTS

State bars internet lender, wins $11.7M settlement over ‘rent-a-tribe’ loans
CashCall Inc., an internet lender accused of hiding behind an American Indian tribe to break state laws, agreed to pay nearly $12 million to settle charges filed by Minnesota’s attorney general.The company, based in California, was also barred from further business in the state, Attorney General Lori Swanson said Thursday. “The company engaged in an elaborate scheme to collect payments far higher than allowed by state law,” Swanson said in announcing the settlement. CashCall must cancel all outstanding loans, pay back consumers and “undo any adverse reporting to the credit bureaus.” August 18, 2016.

Arkansas AG Settles Payday Lending Lawsuit for $750,000  One of the defendants, a South Dakota based company, identified itself as a tribal entity with sovereign immunity. The company, however, was neither owned nor operated by a tribe. The complaint alleged that the South Dakota lender entered an agreement with a California-based company, pursuant to which it would originate payday loans before assigning them to the California company to collect. July 9, 2016.

Courthouse News Service:  $1.6 Million Settlement With Payday Lenders: Nebraska will accept $1.6 million to settle a predatory lending suit against CashCall and Western Sky Financial, which it accused of falsely claiming tribal affiliation to duck lending laws. (May 6, 2016).

Times Free  Press: Chattanooga payday king justified illegal business by giving money to charity  (May 18, 2016)  A used car salesman turned tech entrepreneur who operated an illegal payday lending syndicate from Chattanooga will pay $9 million in fines and restitution, as well as serve 250 hours of community service and three years of probation, after pleading guilty to felony usury in New York. Carey Vaughn Brown, 57, admitted to New York prosecutors that he broke the law from 2001 to 2013 by lending millions of dollars — $50 million to New Yorkers in 2012 alone — with interest rates well in excess of the state’s 25 percent annual percentage rate cap.

New York Touts $3M Payday Loan Settlement:  (May 18, 2016). In its first such action, New York’s top financial watchdog reached a $3 million settlement Wednesday with two debt-buying companies that improperly bought and collected on illegal payday loans.

Vermont AG Enters Largest Settlement With Online Payday Loan Processor  (May 24, 2016)  In the settlement agreement, the company admitted that it processed electronic financial transactions on behalf of approximately 43 separate lenders, in connection with high-interest, small-dollar consumer loans made over the internet. None of those lenders were licensed to make loans in Vermont. Between 2012-2014, however, the company processed approximately $1.7 million in transfers from Vermont residents’ bank accounts.

Payday lender will pay $10 million to settle consumer bureau’s claims  (July 10, 2014) “Ace used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” bureau Director Richard Cordray said. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.”

California Payday Lending Statistics

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

payday lender vultures

Payday and Car Title Lending Statistics

Payday Lending is a $135 million net drain on California’s economy each year: Despite industry claims about creating jobs, a 2013 report from the Insight Center for Community Development estimates the payday lending industry subtracts 1,975 jobs from California’s economy each year, and is a net loss to the state economy of over $135 million annually.

Nationally, four out of five payday loans are rolled over or renewed: Countering industry claims about payday loans as being useful for “one-time emergencies,” a study by the CFPB found that 4 out of 5 payday loans are rolled over or renewed within two weeks, adding to concerns about the high-cost “debt traps” created by these loans.

California consumers pay over $507 million in payday loan fees annually and $239 million in car title fees: A new report from the Center for Responsible Lending finds that consumers pay $239,339,250 in fees for car title loans and $507,873,939 in payday loan fees, ranking California as the #2 state for highest amount of fees paid for car title and payday loans.

More than 15,591 Californians had cars repossessed in 2014 because of car title loans: According to the California Department of Business Oversight, the charge-off rate for auto title loans in 2014 was 4.5 percent. (17,633 of 394,510).  At the national level, recent research from the CFPB found that 1 in 5 car title borrowers will have their car repossessed.

Do these facts concern you?  There is a KEY opportunity to weigh in with the Consumer Financial Protection Bureau as it finalizes rules to regulate payday, car title, and installment lenders. Please share your stories and comments here: CFPB comment.

Learn more about payday lending by visiting CRC’s website.

California Payday Loan Consumers Share their Experiences

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

IMG_4842

How do California consumers who have used payday loans feel about them?

These are just a few of the many stories we’ve heard from consumers who have shared their stories with CRC:

1. MN from San Bruno, CA: “I am currently fighting online payday loans as we speak. I got in to a bind and had to borrow to make sure my daughter and I continued to have a roof over our head. These lenders take money on different days than what was agreed upon and don’t tell you all the fees that they will be adding into on top of the interest. I have one company that I can’t even access my “contract” and they never sent me a copy. If the vicious cycle doesn’t stop the best recourse people in this cycle will have is to file bankruptcy.”

2.  JF from Fresno, CA: “About two years ago I used a payday loan to assist with monthly expenses. I thought it would be easy to pay off but then I noticed I could not afford to pay the loan without securing another! The lenders provide little to no other option to pay back the loan which lets you know they aren’t concerned with helping you get through the hard spot they are more concerned with keeping you in the endless cycle to pad their pockets! Payday loans are BAD business!!!”

 3. SF from Oakland, CA: “In 2006 I was working full-time but when my boyfriend moved out I had to pay the entire rent myself and had trouble making ends meet. I started to use the payday loans and soon found myself in an endless cycle of debt, having to pay off two or more in cash every two weeks in order to get two more to cover my bills. The loan rates were outrageous and some of these franchises require you pay in cash instead of depositing your personal check. It took me a couple of years to get out of this cycle of debt and it kills me to think of all the money I lost on fees over those years. I will never use those services again. These companies are absolutely predatory and should be fully regulated and restricted since they profit from the people who can least spare the financial fleecing. Thank you.

4. JJ from Lamont, CA: No work, needed money to keep afloat and the lender made it to easy to get loan, a car title loan and it has been a nightmare, do yourself a big favor don’t ever get a title loan !

5. M from San Diego, CA: I have been caught up in payday loan for over a year now it’s taking all of my money and I don’t know how to get out help.

6. DD from Los Angeles: “I was in a difficult financial time in my business and needed a $2500 loan to cover my rent that was due. I had exhausted all my other options and wasn’t expecting any checks for a few weeks. I own my car and decided to go to Loanmart to get a loan. I called them up, told them what I needed and what kind of car they had. They approved me for $3000, even though I asked them for only $2500. Considering I was desperate for money, I went ahead with it, not knowing about the interest cap over $2500. Which I am sure they were well aware of and is why they urged me to get a higher loan.

So, after 2 years of paying, I have now given them over $4500, that’s $1500 more than the original loan. They say I still owe them $3000. For a total of $7500 due on a $3000 loan. Its highway robbery. These people are awful, they harass me all the time, lie to me about payment due dates and even on one occasion sent me to collections on a missed payment even though I had already paid it for that month from their 3rd party payment site (moneygram). I went and checked and the payment never went through. Which is very suspicious.

Now they are threatening to repo my vehicle. I don’t know what to do, this whole experience has been horrible. I am self employed and struggle enough getting by. I hope someone can sue them for these shady business practices. I will be more than happy to testify against them.”