WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) announced on Friday that it has reached a settlement with FirstCash, Inc., and its nineteen subsidiaries to resolve allegations of repeated violations of the Military Lending Act (MLA). The agreement, if approved by the court, will impose significant financial penalties and mandate compliance reforms aimed at safeguarding servicemembers and their families.
The lawsuit, originally filed by the CFPB in November 2021, accused FirstCash — a Delaware-based nonbank corporation operating more than 1,000 pawnshops nationwide — of issuing pawn loans to active duty servicemembers and their dependents at annual percentage rates exceeding the MLA’s 36% cap. The CFPB further alleged that loan agreements improperly included arbitration clauses and failed to provide required disclosures, thereby infringing on statutory protections designed to shield military families from predatory lending.
The Bureau also charged that these practices violated a 2013 CFPB order issued against a predecessor company, compounding the seriousness of the infractions.
Under the proposed settlement, FirstCash has agreed to set aside $5 million to compensate servicemembers and their family members affected by thousands of allegedly unlawful pawn loans. In addition, the company will pay a $4 million civil penalty to the CFPB’s victims relief fund.
Moving forward, FirstCash will be required to comply fully with the MLA. The company must either offer an MLA-compliant loan product to eligible military borrowers or adopt a regulatory safe harbor procedure to identify and screen those covered under the Act.
If entered by the court, the order would mark a significant enforcement action spotlighting the federal government’s efforts to protect military families from exploitative lending practices.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.