TitleMax of Nevada ordered to immediately cease and desist offering unlawful title loan agreement, refund customers
The Administrative Complaint for Disciplinary Action brought against TitleMax of Nevada, Inc. by the Nevada Financial Institutions Division (NFID) has resulted in an order being issued at the conclusion of an administrative law hearing.
The August 12 order requires TitleMax to immediately cease and desist offering its Grace Period Payments Deferment Agreement (GPPDA) title loan option and return all principal and interest collected under every GPPDA entered into after December 18, 2014. The order also requires TitleMax to pay an administrative fine of $307,000 with $257,000 held in abeyance provided the company’s ongoing compliance with Nevada law.
NFID’s annual examination of the company in 2014 found that TitleMax offered an agreement entitled Grace Period Payments Deferment Agreement and cited a violation of NRS 604A.445 which allows for only two types of title loans: a 30-day loan, extendable for up to six additional 30 day periods and a 210-day loan that may not be extended. The administrative complaint hearing was sought after a follow-up examination initiated in May 2015 found the company was still offering the GPPDA to customers in violation of statute.
At hearing, the Division argued and the administrative law judge upheld, that by entering into the GPPDA, TitleMax unlawfully extends the term of the loan beyond the initial 210-day term. Under the GPPDA, the customer receives an additional 210 days to pay off their title loan with the first seven payments going toward interest only and the second seven installments going toward principal only. While the interest rate remains the same as the initial loan agreement, the customer’s payments are no longer fully and ratably amortized as required by law. A customer who makes payments according to the GPPDA, will ultimately pay more money in interest than he or she would have paid under their initial loan agreement.
A copy of the full order can be found at http://fid.nv.gov/Opinion/Enforcement_Actions.
Customers that have a current GPPDA title loan agreement with TitleMax should contact their local TitleMax branch with questions.
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