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The Consumer Financial Protection Bureau (CFPB) yesterday took action against a web of corporate entities operating under TMX Finance, broadly known as TitleMax, for violating the financial rights of military families and other consumers in providing auto title loans, according to a CFPB press release. The CFPB found that TitleMax violated the Military Lending Act by extending prohibited title loans to military families and, oftentimes, by charging nearly three times over the 36% annual interest rate cap. TitleMax tried to hide their unlawful activities by, among other things, altering the personal information of military borrowers to circumvent their protected status. The CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. The CFPB’s order ends TitleMax’s illegal activities, and requires the company to pay more than $5 million in consumer relief and a $10 million civil money penalty. TitleMax is a repeat offender, according to the press release. TitleMax has been under a CFPB Order since September 26, 2016, for its lending and debt-collection practices. In the 2016 Order, the CFPB found that store employees, as part of their sales pitch for the company’s 30-day loans, offered consumers a “monthly option” for making loan payments and misrepresented the true cost of its loans if the consumers renewed them multiple times. The CFPB also found that the company engaged in illegal high pressure debt collection practices.

City National Bank, a unit of Royal Bank of Canada, agreed to commit more than $31 million to boost lending to Black and Hispanic home buyers in the Los Angeles area, in the U.S. Department of Justice's largest settlement over illegal redlining, Reuters reported. Yesterday's settlement was part of Attorney General Merrick Garland's Combatting Redlining Initiative, launched in Oct. 2021 to combat housing discrimination. The Justice Department accused City National of violating the federal Fair Housing Act by having "avoided" serving majority-Black and majority-Hispanic neighborhoods in the Los Angeles area between 2017 and 2020. City National, the largest bank based in Los Angeles, was accused of letting staff generate loan applications largely from its disproportionately white customer base instead of reaching out to Black and Hispanic people, and ignoring internal reports that suggested shortcomings in its fair lending practices. The complaint said just 7% of City National's residential mortgage loans in the region went to residents of majority-Black and Hispanic census tracts, compared with 44% of loans by its peers, and that more loans in those tracts went to white people. Under a five-year consent order, City National will commit at least $29.5 million, with the goal of making mortgage and home improvement loans more widely available in majority-Black and Hispanic neighborhoods.

The Consumer Financial Protection Bureau (CFPB) and the New York State Office of the Attorney General yesterday sued a predatory auto lender, Credit Acceptance Corporation, for misrepresenting the cost of credit and tricking its customers into high-cost loans on used cars, according to a CFPB press release. The joint complaint alleges that, among other things, Credit Acceptance hides costs in loan agreements and sets consumers up to fail. The complaint also alleges that Credit Acceptance violated New York usury limits and other consumer and investor protection laws. The lawsuit seeks to force Credit Acceptance to stop its illegal practices, reimburse harmed consumers, pay back wrongfully earned gains, and pay a penalty.

Colleges that lend directly to their students cannot later refuse to release a student’s transcript as a way of forcing them to make loan payments, the Consumer Financial Protection Board said on Thursday, calling the practice “abusive” and a violation of federal law, the New York Times reported. The loans made directly by a college, rather than a traditional lender, are used to pay for classes, but they don’t come with the same protections as federal student loans do. Hundreds of thousands of students at for-profit colleges have taken these loans, which are known as institutional loans, and they’re also offered at some public and nonprofit institutions. The consumer bureau’s ruling was aimed at stopping the colleges from withholding transcripts from students who haven’t repaid the debt. One college that the bureau examined refused to release transcripts to students in default until the full amount had been repaid, even when students had entered into a payment plan. Transcript withholding can make it difficult for students to apply for jobs even if they’ve graduated, since they can’t prove to prospective employers that they have a degree. In some cases, graduates can’t take a job certification exam without a transcript, effectively barring them from employment in the field they studied. Without a transcript, students also can’t transfer their credits to another college if they want to pursue a different career or if they’ve finished a two-year degree and want to earn a bachelor’s degree. The bureau said that blanket policies that use transcript withholding as a way to collect these debts are “designed to gain leverage over borrowers and coerce them into making payments.”

The Consumer Financial Protection Bureau (CFPB) yesterday sued MoneyLion Technologies, an online lender, and 38 of its subsidiaries, for imposing illegal and excessive charges on servicemembers and their dependents. The CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents, through a combination of stated interest rates and monthly membership fees. The CFPB also alleges MoneyLion required customers to join a membership program to access certain “low-APR” loans, and then did not allow them to cancel their memberships until their loans were paid. This is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years.

New York City taxi drivers who owe hundreds of thousands of dollars on loans they took out to operate yellow cabs will see their burdens reduced substantially under a debt relief program announced Tuesday, the Associated Press reported. Under the program announced by city officials, the New York City Taxi Workers Alliance and taxi medallion lender Marblegate Asset Management, loans for 3,000 drivers who owe an average of $550,000 will be restructured to a maximum of $200,000. Of that, $30,000 will be covered by a grant and the balance will be secured by a city-backed guarantee, the officials said. The city-backed guarantee means that drivers won’t risk losing their homes if they default, said Bhairavi Desai, the executive director of the Taxi Workers Alliance, a drivers’ union. “It’s lifesaving and historic,” she said. Many taxi drivers who borrowed to buy the medallions that are required to operate a yellow cab landed in deep debt when the value of a medallion plunged from more than $1 million in 2014 to $200,000 a few years later. Taxi industry representatives blamed predatory lending practices as well as ride-hailing services like Uber for the crisis. City officials, the taxi alliance and Marblegate reached a tentative debt relief agreement in November of last year and worked out the details over the last several months. Under the plan announced Tuesday, medallion owners can apply to refinance their loans starting Sept. 19.

A judge has rejected a challenge to a voter initiative aimed at limiting so-called predatory debt collection, finding that opponents of the measure did not prove a summary provided to voters who signed qualifying petitions was misleading, the Associated Press reported. The ruling by Maricopa County Superior Court Judge Frank Moskowitz also turned away an argument by the attorney for a newly created group funded by Arizona debt collection agencies that alleged that paid petition circulators were improperly registered with the secretary of state’s office. Moskowitz said the Predatory Debt Collection Protection Act qualifies to appear on the November ballot. His ruling is not the last word, however. Attorney Kory Langhofer, who represents a newly formed group called Protect Our Arizona that was funded by debt collection agencies, said Wednesday he has already filed an appeal with the Arizona Supreme Court. The secretary of state also still needs to certify that that proponents turned in enough signatures, although the group backing the measure, Healthcare Rising, turned in more than twice the nearly 238,000 signatures, meaning it is nearly certain it has enough to make the ballot. Healthcare Rising is primarily funded by the California-based Service Employees International Union, which represents nurses and other health care workers, government employees and others in that state.