North Carolina obtains $3.5 million judgment against title lender

north carolina auto title lender finedOn May 8, 2017, the North Carolina Attorney General (AG) announced that it had obtained a $3.5 million judgment against an auto title lender for making illegal loans in the state of North Carolina.

According to the AG’s press release, Liquidation, LLC offered auto title loans without license. The AG alleged that Liquidation, LLC made unlawful loans under various names including Auto Loans, LLC, Car Loan, LLC, and Sovereign Lending Solution, LLC. The lenders offered loans ranging from $800 to $7,000 with interest rates ranging as high as 571%, well above North Carolina’s interest rates limits.

The lenders allegedly solicited loans online and would ask borrowers to send their vehicle title so the lender could secure the loan. If a borrower failed to make a payment, the lenders repossessed the borrower’s vehicle.

In 2016, the North Carolina AG obtained a temporary restraining order and preliminary injunction against the lenders. When the lenders did not appear in court, the AG froze $178,000 in assets to secure restitution funds.

In accordance with the court’s final judgment, the lenders are permanently prohibited from engaging in loan business in North Carolina and must pay a civil money penalty of $3.5 million. The $178,000 in frozen funds will be transferred to NCDOJ for consumer restitution and consumer protection purposes. In addition, the court also declared that any loans the lenders issued void and cancelled and that the liens on the vehicles are also cancelled. This means that consumers who still have their vehicles can obtain a new title without a lien.

Two former employees also entered a consent judgment in which they agreed to permanent injunctions and substantial money judgments unless they collectively pay $15,000 to the North Carolina Department of Justice for consumer restitution.

Tags: Auto Title Loans, State AGs

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