The title loan industry, which is dominated by three Georgia-based companies, has come under fire from consumer advocates and some lawmakers for charging interest rates that can exceed 300 percent in some states and seizing the cars of borrowers who fail to repay their loans.
Title loans are legal in about half the states, and the three major companies operate more than 3,000 stores, including more than 200 in Virginia.
The three lenders are: TitleMax of Virginia; Anderson Financial Services LLC, doing business as LoanMax; and Fast Auto Loans Inc.
In November, the Center for Public Integrity sought copies of the 2014 annual reports the three lenders filed with the Virginia Bureau of Financial Institutions. In addition to revenues, the lenders must report data such as the number of title loans and their terms, the number of defaults and how often they sue customers or repossess their cars. The companies also must disclose if they have been the subject of any “regulatory investigation” for misconduct anywhere in the country within the past three years.
Virginia officials said nobody had asked for the reports before the Center for Public Integrity filed its request. Officials told the center they could find no reason not to disclose them under the state’s public records law.
In Nov. 19 letters to the companies, Virginia Commissioner of Financial Institutions E.J. Face Jr. wrote that his office was “unable to identify a statutory or other legal basis” for keeping the records secret.
But Face gave the lenders a chance to challenge his decision, and all three promptly did.
Making the data public “could endanger the safety and soundness of Fast Auto,” the company wrote in a Nov. 30 legal brief.
TitleMax argued it would suffer “irreparable damage” as a result. The company said anyone “could, at a glance, identify the strengths and weaknesses of TitleMax’s products and their financial risks.”
LoanMax wrote that it would be at a “competitive disadvantage” because competitors could see states “in which LoanMax is at increased risk for regulatory scrutiny due to past regulatory actions.”
Loan Max asked that its report be kept confidential “until there is a hearing on this matter and all other remedies, including an appeal to the Supreme Court of Virginia, have been exhausted.”
No hearing date has been set, and it is not clear how Virginia officials plan to resolve the issue, according to an agency spokesman
Virginia, like some other states, regulates title lending under banking statutes. As a result, the lenders argue they are due the same degree of secrecy that banks and savings and loans receive. Some states agree, while others do not.
LoanMax, in its Virginia petition, argues that none of the other states where it conducts business release such sensitive data. But a title lender with the same owner as LoanMax operates in Missouri, which released similar reports to the Center for Public Integrity.
LoanMax also said in the petition that releasing the information in the 2014 report “might cause unforeseen antitrust problems for Loan Max and other motor vehicle title lenders.”
