Tuesday, May 18, 2010

Attorney General Cuccinelli sues Cash-N-A-Flash

Virginia Attorney General Ken Cuccinelli

RICHMOND (May 18, 2010) — Attorney General Kenneth T. Cuccinelli, II filed a lawsuit today against CNC Financial Services, Inc., doing business as Cash-N-A-Flash, a Hampton-based auto “title lender,” for charging interest rates of 300 percent or more on its loans, in violation of Virginia’s Consumer Finance Act. 

The alleged violations occurred during the period from March 2005 through present date. During this time, Cash-N-A-Flash charged its borrowers interest rates that exceeded statutory limits (12 percent annually) and did not come within any of the exemptions to the Consumer Finance Act. 

“Virginia’s consumer lending laws must be enforced to ensure that borrowers receive legal protection in the marketplace,” Cuccinelli said. “I am pleased that our office will be able to address the alleged wrongdoing in this case.” 

Unless lenders are exempt, the Consumer Finance Act prohibits unlicensed lenders from charging and receiving interest in excess of 12 percent per year on consumer loans. Under current law, one exemption allows a lender generally to offer open-end credit and charge finance charges and other fees at an agreed-upon rate, as long as the lender provides the borrower with a minimum 25-day grace period to repay his loan in full before incurring a finance charge. 

The attorney general contends that, since March 2005, Cash-N-A-Flash structured its title loans at various times as closed-end credit and/or did not provide the required finance charge grace period on initial advances, or on subsequent balances where the borrower had a zero balance. Cash-N-A-Flash’s failure to comply with the requirements for open-end credit made its loans subject to the Consumer Finance Act, which it allegedly violated by charging interest in excess of 12 percent annually. 

The suit was filed today in Richmond Circuit Court. It requests that the court declare all loans Cash-N-A-Flash made in violation of the Consumer Finance Act “null and void” and grant judgment for the benefit of borrowers in an amount equal to all principal and interest collected on all such loans.

Since June 2007, the Office of the Attorney General of Virginia has successfully negotiated six settlements with eight automobile title lenders. These settlements have provided relief to consumers in the following amounts:

approximately $461,000 in refunds to over 2,650 borrowers;

approximately $1.98 million in forborne deficiency collection from nearly 3,000 defaulting borrowers who had their vehicles repossessed; and

approximately $5.19 million in forborne interest and/or principal collection from 9,800 borrowers.

Posted By Valerie Garner

Categories: Finance, Politics, State Politics

Tags: , , ,

Comments (2)

Bill McClure

May 18th, 2010 at 9:42 PM    

About time. Glad to see this happen. 300% is laughably outrageous, if it was not so serious for the poor who are hurt by these predators. They need an alternative to this junk. Bet no late night jokes on this serious issue.


May 18th, 2010 at 10:09 PM    

Agree there Bill – a worthy lawsuit.

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