In a $1.2 million settlement, Virginia title loan companies Fast Auto Loans Inc. and Virginia Auto Loans have agreed to pay West Virginia $450,000 over allegations that they abused and harassed Eastern Panhandle consumers. The corporations also have agreed to cancel about $816,000 in consumer debt as part of the agreement, which resolves a 2012 lawsuit.
About $150,000 of the payment to the state will go toward consumer restitution. The rest of the money will be used by the office of Attorney General Patrick Morrisey for consumer protection activities, held for appropriation by state lawmakers, or returned to taxpayers or consumers.
"While title loans are not legal in West Virginia, some citizens opt to go across state lines to obtain them," Morrisey said in a news release. "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 product often carries annual percentage rates of anywhere from 120 percent to 300 percent. If a consumer defaults, the lender may repossess the vehicle. Fast Auto Loans and Virginia Auto Loans reportedly seized 218 vehicles from West Virginia residents, Morrisey’s office said.
The state alleged that the two firms violated the West Virginia Consumer Credit and Protection Act. According to the lawsuit, they abused and harassed consumers by calling them at home and work and disclosed the debts to others without any legal justification. The lawsuit also alleged the companies coerced consumers into giving up possession of their vehicles because of false threats of arrest and criminal prosecution.