State AG Settles with Auto Title Lender Over Collection Practices

West Virginia Attorney General Patrick Morrisey Thursday announced that the Office of the Attorney General reached an approximately $1.2 million settlement in Jefferson County Circuit Court with Fast Auto Loans Inc. and Virginia Auto Loans Inc.

As part of the settlement, the two title loan companies agreed to close all accounts and zero-balance any debt owed by West Virginia-based consumers within 60 days. In addition, the loan companies agreed to return any vehicles that were seized from West Virginia consumers that have not yet been sold and remove any and all liens on vehicle titles.

The companies agreed to cancel approximately $816,000 in consumer debt and to pay $450,000 to the state, of which approximately $150,000 will be used as consumer restitution. The remaining money will be able to be used by the Office of the Attorney General for consumer protection activities, be held for appropriation by the Legislature, or be returned to the tax payers and/or consumers.

“Our Office is pleased with this settlement in that it will help many hundreds of West Virginia consumers in the Eastern Panhandle, as well as the southern region of the state,” Attorney General Morrisey said. “While title loans are not legal in West Virginia, some citizens opt to go across state lines to obtain them. However, consumers should be cautious about getting these loans, no matter how cash-strapped they may be, because of the high interest rates and the very real danger of losing their cars.”

The State sued Fast Auto Loans and Virginia Auto Loans in 2012 alleging the companies engaged in conduct that violated the West Virginia Consumer Credit and Protection Act. The suit alleged, among other things, that the companies abused and harassed consumers by calling them at home and/or work, and wrongfully disclosed their debts to people listed as references without any legal justification. The suit also alleged that consumers were coerced into relinquishing possession of their vehicles by false threats of arrest and criminal prosecution. Fast Auto Loans and Virginia Auto Loans seized about 218 cars from West Virginia residents, according to records the companies provided to the Attorney General’s Office.

In the settlement, the companies did not admit to any wrongdoing and denied they engaged in the alleged conduct.

“While consumers should always try to pay what they owe, collectors also must abide by the law and treat citizens with respect,” Morrisey said. “Lenders cannot harass or threaten people in order to recoup money that is owed. We will always stand strong to protect West Virginians from collection abuse.”

The Attorney General’s Office will receive a report within the next 60 days from Fast Auto Loans and Virginia Auto Loans showing how much consumer debt was canceled as a result of this settlement, how many vehicles were returned, and how many title liens were removed from vehicles.