The CFPB and the Virginia Attorney General announced that they had entered into a proposed consent order with Woodbridge Coins and Jewelry Exchange, Inc., a Virginia-based pawnbroker, to settle a lawsuit filed in a Virginia federal court alleging the pawnbroker’s closed-end pawn contracts violated the TILA, the CFPA, and Virginia law.
According to the complaint, the pawnbroker charged a finance charge consisting of four monthly fees: interest, maintenance, storage, and clerical. The complaint alleges that the total finance charge disclosed on most of the pawnbroker’s contracts did not equal the sum of these four fees and that most contracts disclosed an understated APR. These inaccurate disclosures are alleged to constitute violations of TILA, Regulation Z, and the CFPA.
The complaint further alleges that the pawnbroker charged interest and a maintenance fee in amounts greater than permitted by Virginia law and that Virginia law did not permit the pawnbroker to charge a clerical fee.
Under the proposed consent order, the pawnbroker is required to pay restitution to consumers of approximately $56,000 representing the amount of fees charged in excess of the amounts permissible under Virginia law, $17,638.61 in disgorgement to the CFPB, a $5,000 civil money penalty to the CFPB, and reimbursement of $6,225.75 to the Commonwealth of VA in reimbursement of attorney’s fees and related costs and expenses. (In contrast to civil money penalties that are deposited into a civil penalty fund administered by the CFPB and whose permitted usage is specified by the Dodd-Frank Act, funds paid for disgorgement are deposited into the U.S. Treasury for unspecified usage over which the CFPB has no control.)