Attorney General Mark Herring announced this week a settlement with Allied Title Lending LLC concerning violations of Virginia’s consumer finance statutes.
The settlement requires the company to pay $850,000 that the Commonwealth can use to provide restitution to customers who opened accounts with Allied during the period from Sept. 28, 2013 through July 23, 2017, and to pay the Commonwealth $150,000 for reimbursement of its attorneys’ fees and settlement administration costs.
The settlement prohibits the company from collecting anything further on thousands of accounts that remain unpaid and that were not converted to a separate loan program in October 2018. The total value of the debt forbearance provided on these accounts exceeds $10 million.
For the relatively few accounts that were converted to the separate loan program, the company can collect limited amounts (totaling less than $500,000 in the aggregate).
“Before recent changes to our consumer finance laws became effective earlier this year, many lenders turned to open-end credit lending as a means to impose extremely high interest rates on small dollar loans to financially vulnerable Virginians. I’m glad we were able to successfully encourage the General Assembly last year to change our consumer finance laws, including those applicable to open-end credit lenders, so that we can better protect Virginians,” Herring said.
“I’m pleased my team and I were able to resolve our claims against Allied in a way that will provide restitution and debt forbearance to thousands of Virginia consumers. My Consumer Protection Section, its Predatory Lending Unit, and I remain committed to doing everything we can to protect Virginians from abusive lending practices.”
The settlement resolves allegations that Allied violated Virginia’s consumer finance statutes, including laws applicable to open-end credit lenders, by:
- Charging a $100 origination fee during the statutorily mandated finance charge-free grace period on all loans.
- Engaging in a pattern of repeat transactions and “rollover” loans with thousands of consumers who were required to close accounts that they paid down to a $0 balance, but permitted to open new accounts on which new fees were charged, on a monthly basis.
Herring will be hiring a settlement claims administrator to distribute restitution monies to affected consumers. Consumers who are eligible for restitution should expect to hear from the claims administrator.
Allied charged interest on its accounts at the annual rate of 273.75 percent. In contrast, with the amended open-end credit plan law that became effective on Jan. 1, 2021, open-end credit lenders are limited to charging no more than interest at an annual rate not exceeding 36 percent and an annual participation fee not exceeding $50.
Allied operated at various times out of 23 locations in the following localities across Virginia: Alexandria, Charlottesville, Fredericksburg, Hampton, Harrisonburg, Highland Springs, Lynchburg, Manassas, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Rocky Mount, Staunton, Tappahannock and Winchester.
For additional information on the settlement or to file a complaint about a consumer protection matter, contact Attorney General Herring’s Consumer Protection Section:
- By phone: (800) 552-9963
- By email: [email protected]
- Online Contact Form/Online Complaint Form
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