Attorney General Shapiro Sues Out-of-State Vehicle Title Lender for Violating PA Usury and Racketeering Laws
Lawsuit Seeks Refund of More Than $3 Million in Illegal Interest to 3,200 PA Consumers and the Release of Over 1,000 Remaining Title Liens
PHILADELPHIA — Attorney General Josh Shapiro today filed a lawsuit against a Delaware-based vehicle title lender for violating Pennsylvania’s usury and racketeering laws.
The lawsuit alleges that Dominion Management of Delaware, Inc. and Dominion Management Services, Inc., which did business as CashPoint, issued loans with interest rates more than 200 percent – in some cases as high as 360 percent interest. As stated in the lawsuit, CashPoint loaned more than $2.5 million through 3,200 illegal title loans to Pennsylvania residents. Since 2013, CashPoint has collected $5.7 million from Pennsylvania consumers toward repayment of these loans – a 128 percent profit.
“These defendants thought that because they were based in Delaware they could evade Pennsylvania laws and exploit consumers by charging illegally high interest rates,” Attorney General Josh Shapiro said. “By filing this lawsuit, I’m holding them accountable and working to protect consumers in the Commonwealth from these types of schemes.”
Title loans are high-cost installment loans that require the borrower to pledge a vehicle title as collateral. Since title loans are extremely expensive, consumers typically turn to title lenders when they are at their most vulnerable – like after losing a job or facing major medical expenses. Under Pennsylvania usury and racketeering laws, title loans are effectively prohibited because title lenders generally charge interest rates far above the Commonwealth’s 6 percent to 24 percent annual interest limit.
Gregory Johnson of Allentown found himself in a desperate financial situation when he was out of work for six months in 2011. After exhausting his savings, he borrowed $1,500 from CashPoint at 360 percent APR so he could continue to pay his mortgage and other bills. His monthly payments were more than $450 per month.
At the end of his six-month loan, CashPoint demanded a $1,994 lump sum payment. When Mr. Johnson could not afford such a large payment, CashPoint told him to continue making the $450 monthly payments instead. He kept paying for more than a year – at least $5,400 more – and CashPoint told him it would continue demanding those payments until he could pay the $1,994 lump sum. When Mr. Johnson had to take a leave from his job for spinal surgery, CashPoint repossessed his car and demanded more than $3,500 to give it back.
Only after Mr. Johnson complained to the Pennsylvania Office of Attorney General was CashPoint willing to accept a lower lump sum – $1,800 plus $1,000 for the repo agent. He and his wife had to borrow $2,800, more than their original loan, from family members so that they could get their car back. All told, Mr. Johnson paid CashPoint and its repossession agent more than $10,000, nearly seven times what he borrowed.
Other consumers told similar stories:
“I borrowed $400 from CashPoint for a title loan in 2013. CashPoint required me to schedule a time to drop off my monthly payment in Delaware,” said Patricia Coker, a victim of CashPoint from Philadelphia who filed a complaint with the Office of Attorney General in 2013. “One month, I didn’t hear from them for three days after making several attempts to contact them to schedule a time to meet. As a result, I missed my payment that month and they repossessed my car. It broke my heart, and I had to start all over from there to get money to get another car. I finally did that, but it wasn’t like the car that I had, which was my first car. I loved my first car.”
“The behavior of CashPoint was frustrating. They went to the houses of people I listed as references and told them I was stealing things from people and they were trying to get it back. They visited a work colleague’s door – not even a close friend – at 2:00 a.m.!” said Joseph Davis, a victim of CashPoint from Montgomery County. “I borrowed less than $1,000 and ended up paying back between $4,000 and $5,000. I was so frustrated that at one point I just wanted them to come get the car. I ended up just paying them after they threatened me. I am glad Attorney General Shapiro and his office is working to protect consumers like me against companies like CashPoint.”
Since 2013, CashPoint has repossessed at least 559 vehicles owned by Pennsylvania consumers. The defendants named in the lawsuit carried out the vast majority of these repossessions – 518 – using Pennsylvania repossession agents. For consumers who are struggling, a repossession can set off a downward financial spiral.
CashPoint and its repossession vendors then charged consumers exorbitant fees, $1,000 in at least one case, to get their vehicles back. CashPoint auctioned off many of the repossessed vehicles, applying the proceeds towards the illegal loans.
Although CashPoint stopped originating new title loans in 2017, as of March 20, 2018, the company had at least 1,146 liens outstanding on Pennsylvania motor vehicles.
This is not the first time CashPoint has been charged with violating state consumer protection laws. In the past, three other state attorneys general have alleged that the company violated their state laws, and CashPoint entered into settlements with each of them without admitting it violated the law:
- District of Columbia in 2009 for $355,000
- Virginia in 2012 for $612,000
- West Virginia in 2015 for $85,000
The lawsuit, which was filed today in the Philadelphia Court of Common Pleas, seeks injunctive relief and restitution estimated at over $3 million for over 3,000 consumers. In addition, the lawsuit seeks release of illegal liens, refund of repossession fees and auction proceeds, and civil penalties of $1,000 for each violation and $3,000 for each violation involving a victim age 60 or older, as provided by state law.
The CashPoint lawsuit underscores Attorney General Shapiro’s deep commitment to protecting Pennsylvanians from usurious lending, even if it means suing out-of-state lenders. The lawsuit – led by Nicholas Smyth, Assistant Director for Financial Consumer Protection, who helped create the federal Consumer Financial Protection Bureau (CFPB) – is similar to the lawsuit the Attorney General brought against Think Finance, Victory Park Capital Advisors, and others, which alleges similar violations of usury and racketeering laws. In the Think Finance case, the U.S. District Court for the Eastern District of Pennsylvania has decided three motions to dismiss in favor of the Attorney General, and the case is moving towards trial.
Like the Think Finance lawsuit, which names as a defendant Think’s former CEO, the CashPoint lawsuit names CashPoint’s owners and top executives, Michael H. Lester and Kevin A. Williams, as defendants. Attorney General Shapiro is committed to suing individuals as well as corporations where an individual was involved in the illegal conduct.
“Protecting the public from financial scams is a key priority of mine, and Nick Smyth is helping us expand our capacity to bring complex cases against financial companies like these that try to rip off Pennsylvanians,” Attorney General Shapiro said. “If you think you’ve been scammed, let my Office know at 1-800-441-2555 or email@example.com. Our Consumer Protection team is here to fight on behalf of Pennsylvanians and make sure they are treated fairly and get what they paid for.”
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