HARRISBURG, PA — Pennsylvania Attorney General Michelle Henry this week announced a multi-million dollar settlement with Community Loans of America, Inc. (CLA), an auto title lending company accused of exploiting Pennsylvanians with unlawful lending practices and exorbitant interest rates.
The national company, which allegedly made thousands of unlawful loans to Pennsylvania borrowers, will pay $2.2 million in restitution and cancel $3.7 million in remaining debt under the terms of the settlement. Some of the interest rates charged by CLA reportedly exceeded a staggering 300 percent.
“This predatory lender targeted Pennsylvanians, thinking it could skirt the law with astronomical interest rates because it was based out of state,” Attorney General Henry said. “My message is clear: we do not care where you are located. If you exploit Pennsylvanians, you will answer for it.”
Auto title loans are high-cost installment loans that require borrowers to pledge their vehicle title as collateral. These loans are typically sought by consumers facing financial hardship, such as job loss or major medical expenses. Under Pennsylvania usury and racketeering laws, title loans are effectively prohibited due to the exorbitantly high interest rates charged, far above the Commonwealth’s 25 percent annual interest limit.
The settlement with CLA follows earlier settlements with other car title lenders, including Auto Equity Loans of DE, Dominion Management of Delaware (operating as CashPoint), and Approved Financial. In total, the Office of Attorney General has secured over $4.4 million in restitution and more than $8 million in debt cancellation for Pennsylvanians who fell victim to these out-of-state car title lenders.
The implications of the settlement are far-reaching. It signals a significant crackdown on predatory lenders who exploit vulnerable consumers with unfair lending practices and high-interest rates. Furthermore, it sends a clear message that Pennsylvania will not tolerate such practices, regardless of where the company is based.
The settlement also underscores the need for consumers to be vigilant when seeking loans, particularly from out-of-state lenders. Consumers who believe they have been victimized by similar usurious car title lenders are urged to contact the Office of Attorney General.
Deputy Attorney General Jonathan Burns filed the CLA settlement in the Philadelphia Court of Common Pleas, marking a significant step towards safeguarding Pennsylvanians from predatory lending practices.
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