St. Louis Business Journal
The settlement of a lawsuit against Missouri Title Loans of Springfield is awaiting final approval in St. Louis Circuit Court. If approved, more than 5,000 borrowers would share the $5 million in refunds.
Missouri law requires that the principal amount of auto title loans be reduced by 10 percent each time the loan is rolled over. Title lenders also must assess a potential borrower's ability to repay and give borrowers notice that they can cancel the loan within a day. The lawsuit, first filed in 2007, alleged that Missouri Title failed to follow these rules. The main conflict, however, was over language in the company's loan agreement that said disputes must be settled in arbitration rather than in court, forbidding "class action" litigation. The Missouri Supreme Court threw out that provision, reasoning that no attorney would take a case over such a small loan and that borrowers would have no legal recourse without class actions.
Missouri Title had appealed the high court's decision to the U.S. Supreme Court, which ordered the Missouri court to reconsider. The Missouri Supreme Court reaffirmed its decision, and the U.S. Supreme Court declined to intervene.