CFPB Sues Five Arizona Title Lenders for Failing to Disclose Loan Annual Percentage Rate to Consumers

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) sued five title lenders operating in Arizona — Auto Cash Leasing, LLC; Interstate Lending, LLC; Oasis Title Loans, LLC; Phoenix Title Loans, LLC; and Presto Auto Loans, Inc. — for failing to disclose the annual percentage rate in online advertisements about title loans. The Bureau alleges that the companies advertised a periodic interest rate for their loans without listing the corresponding annual percentage rate. The CFPB filed five individual administrative lawsuits seeking civil monetary penalties and administrative orders requiring the companies to correct their practices.

Auto Cash Leasing, LLC, formed in 1999, Interstate Lending, LLC, formed in 2005, Oasis Title Loans, LLC, formed in 2013, Phoenix Title Loans, formed in 2013, and Presto Auto Loans, Inc., formed in 2002, all offer vehicle title loans to consumers. All five lenders were formed in Arizona, operate in Arizona, and market their services to consumers online. Auto title loans are secured loans for which the title to a vehicle serves as collateral. A borrower who cannot repay an initial title loan must reborrow or risk losing the title to their vehicle. 

From at least July 6, 2016, the CFPB alleges that the five lenders violated the Truth in Lending Act by advertising loan interest rates on their websites without advertising a corresponding annual percentage rate. For example, one lender advertised on its website a monthly interest rate but failed to include the legally required annual percentage rate for the loan. In its online advertisement, another lender asked consumers to take its advertised rate and multiply it by 12, but did not inform consumers that the calculated number is the annual percentage rate.

A Notice of Charges initiates proceedings in an administrative forum, and is similar to a complaint filed in federal court. This case will be tried by an Administrative Law Judge from the Bureau’s Office of Administrative Adjudication, an independent adjudicatory office within the Bureau. The Administrative Law Judge will hold hearings and make a recommended decision regarding the charges, and the director of the CFPB will issue a final decision, which may be appealed to a federal court. The Notice of Charges is not a finding or ruling that the respondents have actually violated the law.

The Bureau’s Rules of Practice for Adjudication Proceedings provide that the CFPB may publish the actual Notice of Charges ten days after the company is served. If allowed by the hearing officer, the charges will be available on the CFPB website after that date.