McDaniel suit against excessive interest rates on pawned goods

Attorney General Dustin McDaniel filed a consumer-protection lawsuit today against a Texarkana pawn shop accused of charging excessive interest rates on title loans in violation of Arkansas law.

 

McDaniel’s lawsuit alleges that Tri-State Pawn of Texarkana, Inc., assessed illegally high interest rates on auto-title loans made in Arkansas. An auto-title loan, known as a title pawn, is a short-term, high-interest loan in which the borrower provides the lender with the title and a key to his or her vehicle as collateral for the loan, but the borrower retains possession of the vehicle.

 

In at least two transactions, McDaniel contends that Tri-State Pawn charged interest equivalent to a 240 percent annual rate.

 

“These lending practices and those similar, such as payday loans, are unfair and unconstitutional,” McDaniel said. “These types of loans typically push consumers further into debt. We will continue to actively work to stop lending that harms Arkansas consumers.”

 

The complaint states that Tri-State Pawn in one instance seized the vehicle of a borrower prior to the due date of the borrower’s payment, in additon to charging unlawful interest.

 

McDaniel asked the court to order Tri-State Pawn to cease charging and collecting illegal interest, cancel any outstanding illegal debt, and pay restitution and civil penalties.

The lawsuit was filed in Pulaski County Circuit Court.