Carr: Title Pawn Company to Provide $225,000 in Restitution and Penalties for Allegations of Unlawful Practices
Thursday, November 16th, 2017
Attorney General Chris Carr announced that First American Title Lending of Georgia, LLC (First American) has entered into a settlement with the State of Georgia in response to allegations that it engaged in unlawful practices that violated the Georgia Fair Business Practices Act and the Georgia laws governing title pawns (O.C.G.A. § 44-12-130 et seq.).
“Consumers who seek out title pawns may already be in financial straits,” said Attorney General Chris Carr. “Our office is committed to protecting vulnerable consumers from companies that try to intimidate and take advantage of them through false threats and illegal actions.”
A title pawn is essentially a short-term, high interest rate pawn transaction that uses the clear title on a consumer’s vehicle as collateral. If a consumer defaults on his or her payments, the title pawn company’s only recourse, like in any pawn transaction, is to require the consumer to turn over the car, or repossess it if the consumer refuses to do so voluntarily. The Attorney General’s Office alleges that when some of First American’s customers defaulted on their loans, the company sued them for the outstanding principal, interest and fees, which is not allowed in pawn transactions.
The company also allegedly threatened consumers with arrest warrants, which it lacked the authority to issue. In addition, First American violated Georgia law by failing to prominently include the word “pawn” or the words “pawn transaction” in its advertisements and by using the term “loan” in its advertising of the business.
In resolution of the aforementioned allegations, First American has entered into a settlement with the Attorney General’s Office requiring that it:
provide $196,573.69 in consumer restitution and return of titles;
dismiss all pending lawsuits against consumers in which it attempted to hold them personally liable for principal, interest, fees and/or other costs associated with a pawn transaction;
have any judgments entered against such consumers set aside;
pay $25,000 in penalties and fees to the State;
refrain from engaging in deceptive practices, including threatening consumers with actions it does not have the authority to take, such as the filing of arrest warrants; and
clearly and conspicuously represent that it is offering pawn transactions, and not mischaracterize its offerings as loans.
Should the company violate any terms of the settlement between now and December 1, 2020, it must pay the State an additional $65,000.