In September, the CFPB filed individual administrative lawsuits against five Arizona auto title lenders for deceptive online advertising practices. On December 20, the CFPB entered into a consent order with one of those lenders. Presto Auto Loans, Inc., an auto title lender operating in the State of Arizona, settled the charges by agreeing to pay a civil money penalty of $125,000 to the CFPB’s Civil Penalty Fund.
Presto markets its auto title loan services on its website. According to the consent order, Presto advertised “5% MPR TITLE LOANS ½ THE MAX LEGAL RATE.” Presto, however, failed to disclose a corresponding APR for the advertised monthly finance rates. The advertisement also did not use the term “annual percentage rate” or the abbreviation “APR.” TILA and Regulation Z require the creditor to express its finance charge as an annual percentage rate and state the rate using that term. According to the consent order, Presto’s failure to disclose a corresponding annual percentage rate when advertising a periodic interest rate violated the Truth in Lending Act (TILA) and the Consumer Financial Protection Act (CFPA).
In addition to paying a civil money penalty of $125,000, the consent order also requires that Presto cease and desist from advertising a rate of finance charge other than the APR unless it is a simple annual rate or periodic rate that is applied to an unpaid balance in conjunction with, but not more conspicuously than, the APR as required by TILA.
The consent order states that Presto “changed its advertisement to include the correct disclosure [in September], after being served with the Notice of Charges.” With a quick visit to Presto’s website we observe that Presto has in fact revised its advertisement. We note, however, that Presto still advertises a 5% monthly rate at the top of their website with a corresponding APR disclosure much further down the page that, while in bold text, certainly pushes the envelope in terms of proximity. Further, Presto continues to advertise the 5% monthly rate on other pages of its website without a corresponding APR disclosure. Finally, Presto’s home page contains a video advertisement that contains other potential TILA that the Bureau did not raise in its Notice of Charges or consent order. We wonder whether the CFPB overlooked these items, ignored them, or will pursue further action at a later date.
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