September 22, 2016
Five loan companies in Arizona have been sued by the Consumer Financial Protection Bureau (CFPB) for failing to follow disclosure guidelines in online advertisements. Guidelines state that lenders must follow specific formats for disclosing any interest rate changes in online marketing. The five lenders, which make loans secured by the borrower’s car title, did not include information related to the APR of their loans.
Named in lawsuits by the CFPB, the five companies are Interstate Lending, Auto Cash Leasing, Phoenix Title Loans, Presto Auto Loans, and Oasis Title Loans. Allegations against the companies state that the listed rates in the advertisements were lower than those borrowers would be given.
All the loans offered by the companies were secured by collateral, in this case, a vehicle title. These types of loans are aimed at those with poor credit, no credit, or poor credit scores. Many see this type of loans as a scam because the borrower must repay the loan, take out another loan, or give up their vehicle. Often, borrowers cannot give up their vehicle, which means that they have to borrow money again. This cycle continues, leading the borrower to build up a huge interest debt.
The CFPB’s lawsuit states that it is seeking orders against the companies, requiring them to adjust their advertising and asking that they are charged a penalty fee for dishonest practices.
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