Arkansas Attorney General Leslie Rutledge and Tri-State Pawn of Texarkana Inc. have reached a settlement to resolve allegations that consumers were charged excessive interest rates on title loans, a violation of Arkansas law.
“Predatory lending practices consistently rank among the top 10 complaints made by Arkansans to the Attorney General’s office,” said Attorney General Rutledge. “More often than not, these unfair loans only push consumers further into debt. This pawn shop is being held accountable, and I will continue to investigate and go after those who exploit Arkansans.”
The consent judgment, which was filed in Pulaski County Circuit Court, prohibits Tri-State Pawn from charging or collecting from consumers on auto pawns or title loans and all outstanding auto pawns or title loans entered into by the pawn shop with Arkansans are voided.
$8,697 will be paid to the Attorney General’s office to be distributed to those consumers affected by the pawn shop’s unlawful actions. Tri-State will also pay $108,000 to the Attorney General’s office to be deposited into the Consumer Education and Enforcement Fund.
The complaint filed in 2013 stated that Tri-State Pawn in one instance seized the vehicle of a borrower prior to the due date of the borrower’s payment, in addition to charging unlawful interest, equivalent to a 240 percent annual rate.
An auto-title loan, known as a title pawn, is a short-term, high-interest loan in which the borrower provides the lender with the title and a key to his or her vehicle as collateral for the loan, but the borrower retains possession of the vehicle.