HB Ad Slot
HB Mobile Ad Slot
CFPB and Pawn Store Operator to Settle MLA Suit
Thursday, June 5, 2025

On May 30, the CFPB and a national pawn store operator filed a joint status report in the U.S. District Court for the Northern District of Texas announcing that they have reached an agreement to resolve a 2021 Bureau lawsuit alleging violations of the Military Lending Act (MLA) and a 2013 CFPB consent order. The suit alleged that the pawn store operator and its subsidiary issued thousands of high-interest loans to active-duty servicemembers and their families in violation of federal law.

In its complaint, the CFPB alleges that the company:

  • Charged servicemembers unlawful interest rates. The company allegedly made over 3,600 pawn loans to covered borrowers with MAPRs exceeding the MLA’s 36% cap, in some cases reaching over 200%.
  • Imposed prohibited arbitration clauses. Loan agreements allegedly included mandatory arbitration clauses, in violation of the MLA’s express restrictions.
  • Failed to provide required loan disclosures. The company allegedly failed to deliver required MLA disclosures, including MAPR statements, at the time of the transaction.
  • Violated a 2013 CFPB consent order. The company, as a successor to a previously sanctioned entity, allegedly continued making illegal loans in violation of the 2013 consent order. The order required more than $14 million in consumer refunds and a $5 million civil penalty, and mandated that the company cease alleged misconduct targeting military families and improve MLA compliance.

While the exact terms of the new settlement have not yet been disclosed, the CFPB had previously sought injunctive relief, rescission of void contracts, consumer redress, civil money penalties, and corrections to consumer credit reports.

Putting It Into Practice: Although the Bureau has scaled back certain enforcement actions in recent months, enforcement of MLA violations continues to be a priority for the current administration (previously discussed here and here). Lenders offering consumer credit to servicemembers should continue to review and strengthen their MLA compliance protocols to ensure compliance.

Listen to this post 

HTML Embed Code
HB Ad Slot
HB Ad Slot
HB Mobile Ad Slot

More from Sheppard, Mullin, Richter & Hampton LLP

HB Ad Slot
HB Mobile Ad Slot
 
NLR Logo
We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up for any (or all) of our 25+ Newsletters.

 

Sign Up for any (or all) of our 25+ Newsletters