Consumer Financial Protection Bureau settles FirstCash Military Lending Act case with USD 5 million redress fund and USD 4 million penalty

The Consumer Financial Protection Bureau has reached a settlement with FirstCash, Inc. and 19 subsidiaries in its November 2021 lawsuit alleging violations of the Military Lending Act (MLA) related to pawn loans to active duty servicemembers and certain dependents. The parties jointly filed a stipulated final judgment and proposed order that would resolve the case if entered by the court. The CFPB alleges that since 3 October 2016 the defendants made thousands of pawn loans to MLA-covered borrowers with rates exceeding the MLA’s 36% annual percentage rate cap, required arbitration in dispute provisions, and failed to provide all required disclosures, and that the conduct also violated a 2013 CFPB order against a predecessor entity. If approved, the order would require USD 5 million to be set aside for redress, a USD 4 million payment to the CFPB’s victims relief fund, and ongoing MLA compliance, including either offering an MLA-compliant loan product to servicemembers and their families or using a regulatory safe harbor to screen for MLA-protected borrowers. The settlement would take effect upon court entry of the final judgment and order.