California fines title lender, says its pricing violated state law
California’s Department of Business Oversight has ordered TitleMax of California to pay nearly $700,000 in restitution to consumers for allegedly violating the state's interest rate cap.
The department said Monday that TitleMax charged consumers fees to push loan amounts above $2,500 in an effort to exceed the loan threshold at which the state's rate cap applies.
California state law currently caps interest rates at roughly 30% on auto title loans of $2,500 or less. A new law set to go in effect next year will impose a rate cap on larger loans.
The lender is a unit of TitleMax of Savannah, Ga. The company will cease originating new loans in California in January, the department said.
The state recently passed legislation to close a loophole that allowed loans above $2,500 to have no rate cap. Starting Jan. 1, interest rates on installment loans of $2,500 to $9,999 will be capped at 36%.
TitleMax also agreed to pay a $25,000 penalty to resolve allegations that it made false or misleading statements about the terms of its auto title loans and filed a report with state regulators that misrepresented the amount of first loan payments.
TitleMax did not return calls and emails seeking comment.
Last year, the department sought to revoke TitleMax's lending license after the company allegedly included vehicle registration, lien and handling fees in principal loan amounts, charged illegal fees and submitted inaccurate reports during a 2016 exam, the DBO said.