CFPB orders TitleMax to pay $10M penalty for violating Military Lending Act

The Consumer Financial Protection Bureau ordered TitleMax to pay over $5 million in consumer relief and a $10 million civil money penalty for violating the Military Lending Act.

TitleMax, which is made up of TMX Finance LLC and many subsidiaries across the U.S., extended prohibited title loans to military families and often charged nearly three times more than the 36% annual interest rate cap, the regulator said. Between Oct. 3, 2016, and Sept. 17, 2021, TitleMax allegedly made at least 2,670 prohibited auto title loans to borrowers covered under the Military Lending Act.

The company also raised loan payments for borrowers by charging unlawful fees on about 15,000 loans and attempted to hide its unlawful activities by changing the personal information of military borrowers, among other things, to circumvent their protected status, according to the CFPB.

The regulator required TitleMax to implement and maintain robust internal controls and testing to prevent and detect potential law violations.

The CFPB called TitleMax a "repeat offender" as the company has been under a CFPB order since Sept. 26, 2016, for lending and debt-collection practices. In the 2016 order, the regulator ordered the company to pay a $9 million penalty.