CFPB and FirstCash Settle Military Lending Act Lawsuit
FirstCash Settles wiht CFPB Over Military Lending Act Violations, Agrees to $4 Million Fine
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Washington D.C. – FirstCash Inc. and its subsidiaries have reached a settlement with the Consumer Financial Protection Bureau (CFPB) concerning alleged violations of the Military Lending Act (MLA). The agreement mandates FirstCash to pay a $4 million fine to the CFPB’s victims relief fund and implement measures to ensure compliance with the MLA.
CFPB Alleges Widespread MLA Violations
The CFPB’s lawsuit, filed in November 2021, accused FirstCash, a prominent pawn store operator, of several breaches of the MLA. these allegations included making pawn loans to covered borrowers with interest rates exceeding the legal annual percentage rate cap of 36%. Furthermore, the agency claimed that firstcash improperly required arbitration in cases of disputes and failed to provide all legally mandated loan disclosures.
At the time of the lawsuit’s filing, then-CFPB Director Rohit Chopra highlighted FirstCash’s history of alleged misconduct. “FirstCash is a repeat offender and cheated military families over and over again,” Chopra stated in a press release. “FirstCash and Cash America West gouged military families and robbed them of their rights to go to court.”
FirstCash to Offer New Military-focused Lending Product
As part of the settlement, FirstCash has committed to introducing a new pawn lending product specifically designed for members of the U.S. military and their immediate families and dependents, who are protected under the MLA. This initiative aims to provide compliant and accessible financial services to the military community.FirstCash CEO Rick Wessel expressed his company’s viewpoint on the settlement. “We are pleased to have reached this agreement with the CFPB,” Wessel said in a company press release. “while we disagree with the CFPB’s allegations regarding our military lending practices, we believe that agreeing to this settlement and putting this matter behind us is the best path forward for the company. We remain committed to best meeting the needs of our customers, including members of the military and their families, and to continue providing excellent service.”
CFPB Continues Efforts to Protect Servicemembers’ Financial Interests
This settlement with FirstCash is part of a broader effort by the CFPB to safeguard the financial well-being of servicemembers. In a separate report released in January, the CFPB found that servicemembers often face higher costs then civilian borrowers when obtaining credit for vehicle purchases and when buying add-on products such as warranty, service and maintenance plans, and guaranteed asset protection (GAP) insurance. The bureau has pledged to continue its work in protecting the financial interests of those who serve in the U.S. military.