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FirstCash Pawnshop Loans Lawsuit Overview:
- Who: The Consumer Financial Protection Bureau (CFPB) has filed a complaint against one of the nation’s largest pawnshop operators, FirstCash, Inc., and its subsidiary Cash America West.
- Why: The CFPB claims FirstCash violates the Military Lending Act by issuing service members loans with unlawfully high interest rates.
- Where: The lawsuit is pending in Texas federal court.
Pawnshop operator FirstCash, Inc. has been hit with a lawsuit filed by the Consumer Financial Protection Bureau (CFPB) alleging it issued service members loans with high interest rates in violation of laws protecting military families.
The CFPB claims FirstCash, and its subsidiary Cash America West are violating the Military Lending Act by handing out loans with interest rates that regularly exceed 200 percent.
“FirstCash is a repeat offender and cheated military families over and over again,” CFPB Director Rohit Chopra said, according to Law360. “FirstCash and Cash America West gouged military families and robbed them of their rights to go to court.”
The CFPB claims FirstCash required military members waive their rights to sue when signing loan contracts that were not presented with the proper disclosures when doing business with the pawnshop chain.
FirstCash is under contract for eight years to abide by the Military Lending Act, according to the bureau.
Pawnshop Predecessor Cited for Previous Loan Law Violations, Says FirstCash Lawsuit
The CFPB previously found in November 2013 that FirstCash predecessor Cash America International Inc. had been issuing loans with interest rates that were illegally high, according to the complaint.
Further, the CFPB said it discovered Cash America employees had been forging attorney signatures on legal documents with stamps—causing 14,000 consumers to have to pay more to settle debt collection claims.
Cash America had agreed to be more in compliance with the Military Lending Act, refund customers more than $14 million, and pay a $5 million fine to resolve the allegations.
In 2013, Cash America in Georgia agreed to pay $36 million to end a class action lawsuit alleging that the company made improper payday loans and charged interest and fees on these loans at amounts higher than what the law allows.
The CFPB claims that FirstCash and Cash America West have reneged on their agreement to be in compliance by issuing more than 3,600 pawnshop loans with unlawfully high interest rates.
The alleged illegal pawnshop loans took place between June 2017 and May 2021 and were given to consumers in Arizona, Utah, Washington, and Nevada, according to the CFPB’s complaint.
The CFPB is seeking to bar FirstCash from further violating the Military Lending Act and to stop collecting debt on the loans with illegally high interest rates.
Last month, the CFPB asked Amazon, Facebook, Google, Apple, PayPal, Square, Alipay, and WeChat Pay to hand over information regarding the company’s payment systems.
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The CFPB is represented in-house by Eric Halperin, Jeffrey Paul Ehrlich, Kara K. Miller, Jacob A. Schunk, Lane C. Powell, Maxwell S. Peltz, and Navid Vazire.
The Pawn Shop Military Loans Lawsuit is Consumer Financial Protection Bureau v. FirstCash, Inc., et al., Case No. 4:21-cv-01251, in the U.S. District Court for the Northern District of Texas.
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