The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against pawn lenders FirstCash, Inc. and Cash America West, Inc. on Friday (Nov. 12) in a Texas federal district court, charging the companies with violating the Military Lending Act (MLA) by charging active-duty service members too much on loans.
The lawsuit says the companies exceeded the 36% annual percentage rate limit on pawn loans for service members and their dependents, and also charges FirstCash with violating a 2013 CFPB order against its predecessor company regarding MLA violations.
The CFPB asked the court to impose an injunction on FirstCash and Cash America West as well as a redress for all affected borrowers and a civil financial payout.
“FirstCash is a repeat offender and cheated military families over and over again,” said CFPB Director Rohit Chopra in the ruling. “FirstCash and Cash America West gouged military families and robbed them of their rights to go to court.”
Fort Worth, Texas-based FirstCash and its wholly-owned subsidiaries operate more than 1,000 pawn shops across the U.S. The publicly-traded company has a market capitalization of about $3.5 billion. Cash America West, Inc., one of FirstCash’s subsidiaries, has pawn stores in Arizona, Nevada, Utah and Washington.
According to the CFPB complaint, FirstCash and Cash America West violated the MLA between June 2017 and May 2021 by making more than 3,600 pawn loans in excess of the 36% APR limit from their Arizona, Nevada, Utah and Washington stores, including many that exceeded 200% APR.
The CFPB also alleges that the loan contracts required the borrowers to give up their ability to sue and didn’t make all required loan disclosures, both violations of the MLA. CFPB says FirstCash, Cash America West and other subsidiaries have made similar violations with loans in these and other states based on its limited scope of transactional data, starting Oct. 3, 2016.
The CFPB forced Cash America International to stop violating the MLA in 2013 and says that FirstCash, as a successor to Cash America, is subject to that order and is in violation of it.
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