On February 2, the CFPB and Virginia Attorney General filed a lawsuit in federal court against Woodbridge Coins and Jewelry Exchange, Inc., doing business as Woodbridge Gold & Pawn (Woodbridge). Woodbridge’s principal place of business is in Woodbridge, Virginia. Woodbridge operates as a pawnbroker, issuing closed-end loans secured by personal property.

The complaint alleges that Woodbridge’s actions violated the Truth in Lending Act (TILA), the Consumer Financial Protection Act (CFPA), Virginia’s pawnbroker statutes, and the Virginia Consumer Protection Act.

In the complaint, the CFPB and Virginia Attorney General allege that Woodbridge deceived consumers by failing to accurately disclose the finance charge and annual percentage rate associated with closed-end pawn transactions.

According to the complaint, Woodbridge charges consumers a finance charge on their loans which is comprised of four fees: “maintenance,” “interest,” “storage,” and “clerical.” The CFPB alleges that since at least May 2014, Woodbridge misled its customers about the costs of their loans by disclosing total finance charges that did not equal the sum of the four fees disclosed in the contract. The complaint claims that the “discrepancy between the total of the finance charge and the sum of its parts is likely to mislead consumers.” Further, the contracts disclosed inaccurate annual percentage rates (APRs), understating the APR in nearly all of its contracts. According to the Bureau’s press release, Woodbridge’s inaccurate disclosures understated the true APR by as much as half of the actual cost in some cases.

The CFPB and Virginia Attorney General also filed a proposed consent order which will have the full force of law only when signed by the presiding judge. The proposed consent order, if approved by the court, would require Woodbridge to:

  • Cease issuing consumer-finance contracts that disclose an inaccurate APR;
  • Pay over $56,000 in restitution to affected consumers;
  • Forfeit over $17,000 in ill-gotten gains; and
  • Pay $5,000 to the CFPB’s Civil Penalty Fund.

This consent order is the latest in a series of recent CFPB enforcement actions against Virginia pawnbrokers. In November 2016, the CFPB filed suit against B&B Pawnbrokers for allegedly deceiving consumers about the actual annual cost of its loans. In December 2016, the CFPB filed four more lawsuits against four Virginia pawnbrokers for alleged violations of the CFPA and TILA.