A pawnbroker in Virginia will have to face paying restitutions to customers whom the Consumer Financial Protection Bureau (CFPB) and the Attorney General of Virginia said it deceived about the actual costs of its loans.
The CFPB and Virginia Attorney General took action against Woodbridge Coins and Jewelry Exchange, Inc., which operates as Woodbridge Gold & Pawn, alleging that the business was in violation of the law by falsely stating the charges associated with its pawn loans.
The CFPB confirmed that it will file a complaint and a proposed consent order in federal court that would force Woodbridge Gold & Pawn to pay $79,000 in consumer relief and penalties as well as end its deceptive loan messaging.
“Consumers are entitled to know the actual annual cost of a loan,” CFPB Director Richard Cordray explained in a statement. “Woodbridge Gold & Pawn deceived consumers about those costs, and with today’s action we are securing relief for consumers who were wronged.”
“In recent years we have seen a rash of pawn brokers around Virginia skirting laws and overcharging consumers,” Virginia Attorney General Mark Herring added. “If you’re considering using a pawn shop or other small dollar loan, you should always closely review the terms and know your rights before signing anything that might result in even more money coming out of your pocket.”
The pawnbroker, which is based in Woodbridge, Va., issues closed-end loans secured by personal property. The business charges consumers a finance fee on their loans, which comprises four separate charges – “maintenance,” “interest,” “storage,” and “clerical.”
However, the CFPB revealed that since May 2014, Woodbridge Gold & Pawn has disclosed deceptively low annual percentage rates (APR) to its customers that did not accurately reflect all of its fees and charges associated with the loans. These misleading disclosures prevented many customers from truly understanding the APRs they were being charged.
The CFPB and the Virginia Attorney General have accused the business of violating the Truth in Lending Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Virginia’s pawnbroker statutes, and the Virginia Consumer Protection Act. Under the proposed consent order, Woodbridge Gold & Pawn would be required to pay more than $56,000 in restitution to approximately 1,000 consumers, surrender approximately $17,000 in ill-gotten gains, and pay $5,000 to the Bureau’s Civil Penalty Fund.