CFPB defends vast investigation into auto securities lender
The Consumer Financial Protection Bureau rejected TMX Finance LLC’s offer to end an investigation into the auto securities lender’s business practices, dismissing the company’s claim that it was illegally broad.
The CFPB requested documents from the company in February for an investigation into potentially illegal lending, servicing and debt collection practices by “consumer loan companies or securities lending companies,” according to decision.
TMX Finance, represented by Allen Denson of Venable and Richard Zack of Troutman Pepper Hamilton Sanders, had argued that the request encompassed “all of the company’s operations” and failed to identify an alleged violation as required by Consumer Financial Protection Act.
“Even if that were the case,” the entire company was investigated, “that would not be enough to invalidate an investigation subpoena,” CFPB Acting Director Dave Uejio wrote in a decision rendered on April 26 Monday.
The decision marked the first time Biden-appointed Uejio has spoken out on a petition to vary or quash a civil inquiry request.
Denson, Zack and a representative for the company did not immediately respond to requests for comment on Monday.
The ruling required the company to comply with the CFPB’s request for documents by May 6.
CFPB spokeswoman Tia Elbaum declined to say whether the investigation was a large operation in the area.
TMX Finance, based in Savannah, Ga., Operates consumer credit companies including TitleMax, which it says is one of the largest in the United States offering loans to consumers secured by their vehicles. It has over 1,000 locations in 16 states.
TMX Finance previously paid a $ 9 million penalty to settle with the CFPB in 2016 abusive sales practices in Alabama, Georgia and Tennessee and debt collection practices in 18 states that the CFPB said it illegally exposed the debts of consumers to their colleagues and friends. The company did not admit any wrongdoing.
The deal required the company to report on its compliance at the agency’s request until September 2021. TMX Finance said in its petition that it had not heard from the agency for more than one year when she received the new inquiry request in February.
TMX Finance argued that the new request did not specify whether it had done anything specific to merit consideration “or whether it was the unlucky recipient of a civil investigation request as part of a wide sweep. Of the industry”.
Uejio noted in his ruling that the courts have upheld the legality of even broader claims by the agency, including the case against debt collection law firm Seila Law.
The petition is In re TMX Finance LLC, No. 2021-misc-TMX Finance LLC-001, before the United States Consumer Financial Protection Bureau.
For TMX Finance: Allen Denson of Venable and Richard Zack of Troutman Pepper Hamilton Sanders
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