The Bureau of Consumer Financial Protection (BCFP) has settled with Triton Management Group, Inc. (Triton), a small dollar lender operating under the names “Always Money” and “Quik Pawn Shop.” Triton offers high-cost, short-term loans including payday, auto title pledge, and installment loans primarily to consumers for personal, family, or household purposes.
The Consent Order alleges that Triton violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act and the disclosure requirements of the Truth in Lending Act (TILA). BCFP alleged that Triton misrepresented and understated the finance charges for Mississippi auto-title loans on a 10-month payment plan. Mississippi law requires auto-title loans to be structured as a single payment transaction with full payment at the end of a 30-day loan period. A 30-day extension may be granted, provided that the lender reduces the principal amount by at least ten percent for purposes of calculating interest.
Triton consumers signed a 30-day title loan agreement that included a disclosure of the amount financed and the finance charges for the single-payment transaction. At the same time, Triton also provided consumers with a 10-month payment plan. This 10-month payment plan was the presumptive payment schedule for many consumers. The finance charge listed at the top of the payment schedule, however, was for the 30-day single payment transaction, not the 10-month payment plan. Triton failed to disclose the actual finance charges under the 10-month plan, resulting in consumers paying significantly higher charges than those appearing on the loan disclosure document.
BCFP also alleges that Triton violated TILA requirements by failing to disclose the annual percentage rate in three in-store advertisements that displayed loan information. These advertisements were on display to consumers at two Mississippi retail stores and one Alabama retail store.
As part of the settlement, Triton is barred from misrepresenting the costs and other terms of their loans and must return unlawful fees paid by consumers. Triton also agreed to a judgment of $1,522,298, which represents the total interest payments made by affected consumers; however, due to Triton’s inability to pay this amount, full payment is suspended upon payment of $500,000.
Triton’s settlement serves as an important reminder that when providing consumers with loan options of varying terms and rates, lenders must ensure consumers receive full and accurate loan disclosures for the loan option they select.
*Ali Najaf contributed to this post.