TitleMax Class Action Over Lending Loans with Interest Rate of 132%
TitleMax, based in Delaware, allegedly illegally charged customers interest rates of 132% while operating a sophisticated loan sharking scheme, according to a new class-action lawsuit.
David Mayo v. TitleMax of Delaware, Inc.
Lead Plaintiff David Mayo filed the class action lawsuit in Pennsylvania, alleging that TitleMax violated the state’s Loan Interest Protection Law, as well as its Unfair Trade Practices and Consumer Protection laws.
The claim states that Mayo suffered financial difficulties this winter due to the COVID-19 outbreak, falling behind on payments and other necessities. Mayo has poor credit and was denied by traditional lenders. Browsing on the internet, he ended up applying for a loan with TitleMax.
On April 10, he received a 48-month loan from TitleMax for $7,751.39 at a 132.01 percent annual percentage rate. He asserts that the total loan repayment value is $41,204.10, which includes a financing charge of $33,452.71.
TitleMax is seeking payment of a total of $41,204.10 to settle a $7,751.39 loan, the claim added.
In the class action lawsuit, Mayo argues that the legal interest rate for an unlicensed lender in Pennsylvania is 6% per annum. This means that the permitted finance charge on his loan with TitleMax should only be $986. Yet, the business claims he owes $32,466.71.
According to the complaint, the plaintiff’s loan is collateralized by his 2020 Ford Fusion — which has a market value of more than $20,000. TitleMax has threatened to bring the vehicle to Pennsylvania and repossess it unless he pays $33,452.71 in interest.
Furthermore, the vehicle is needed by Mayo for transportation to work. If it is repossessed, he will suffer injuries, including loss of income and the ability to provide for himself.
Moreover, the loan payments of $858.42 per month are more than Mayo can afford. The $33,452.71 in interest he is scheduled to pay is needed for him to cover his living expenses in Pennsylvania, including:
- Healthcare, and
Mayo alleges that Titlemax concealed loan terms from him during the loan application process. The loan officer prepares the document on a computer with the screen facing the lending officer.
The plaintiff was instructed to accept the agreement on the computer by the lending officer but did not turn over control of the computer to him so that he could examine the entirety of the deal he was accepting.
In addition, Mayo was not permitted to view the Titlemax’s disclosure, including:
- Annual percentage rate
- Financing charge
- Payment schedule, and
- Overall payments
Preying on the Limping
According to the lawsuit, TitleMax operates a sophisticated loan sharking scheme in which it provides small loans to consumer borrowers secured by their vehicles at triple-digit interest rates.
Furthermore, these loans are utilized to take advantage of consumers who have poor credit and an extreme need for cash.
Lastly, TitleMax takes a property interest in collateral located in the Commonwealth and documents a claim on the collateral vehicle with the Pennsylvania Department of Transportation. It is done for each loan the business provides to a customer in Pennsylvania.
The class action lawsuit alleges that TitleMax’s interest rates violate Pennsylvania law, which has a nonwaivable usury statute.
The lender maintains that it can compel Pennsylvania borrowers to waive the statute’s protection — by making them sign a loan agreement containing a Delaware choice of law clause. However, it is not being practiced by the business and is unenforceable.
Mayo wishes to represent a class of Pennsylvania people who may enter into an agreement with TitleMax in the future for a loan with an interest rate greater than 30%.
Moreover, the plaintiff is suing for violations of Pennsylvania’s Loan Interest Protection Law, as well as the state’s Unfair Trade Practices and Consumer Protection laws. He also seeks Class certification, damages, attorney’s fees, and costs.
Editor’s Note on TitleMax High Interest Class Action Lawsuit 2021:
This article is written to inform you of TitleMax’s class-action lawsuit over allegedly operating a loan-sharking scheme.
Case Name & No.: David Mayo v. TitleMax of Delaware, Inc.
Jurisdiction: Court Of Common Pleas, Philadelphia County, Pennsylvania
Products/Services: Unfair Trade Practices
Allegations: TitleMax allegedly violated Pennsylvania Loan Interest Protection Law due to lending with a 132% interest rate
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