Mass Attorney General: Motor vehicle title lender pays $900,000 in debt relief, restitution and penalties

In full disclosure, the following press release was submitted to SOURCE media by the Massachusetts Attorney General’s Office. (File photo.)

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BOSTON — A motor vehicle title lender has agreed to provide more than $900,000 in debt relief, restitution and penalties to resolve allegations that it engaged in illegal auto lending practices, including granting consumer loans with exorbitant interest rates, pursuing debt with excessive phone calls and emails, and threatening to repossess cars, all in violation of Massachusetts consumer protection laws, announcing today Attorney General Maura Healey, June 29.

The waiver insurance, filed in Suffolk Superior Court, resolves allegations that New Hampshire-based NH Title Group, Inc. f/k/a Massachusetts Title Loan, Inc. and Capital Title Loan, charged Massachusetts borrowers charged usurious interest rates for low-value auto title loans and engaged in illegal debt collection and auto repossession practices. NH Title Group, Inc. ceased operations in Massachusetts and New Hampshire in 2019.

“This company has targeted financially distressed consumers and engaged in nefarious tactics to collect illegal loans, including repossessing cars,” AG Healey said. “We will continue to aggressively pursue businesses that engage in illegal auto lending practices and hope this sends the message that we will not tolerate lenders ripping off our residents.”

The AG office began investigating NH Title Group, Inc. following several consumer complaints. The investigation found that the company had made approximately 2,745 auto title loans to Massachusetts consumers for amounts under $5,000 and with usurious interest rates of up to 300%.

These exorbitant interest rates far exceeded the rate cap under the Small Dollar Loan Statute of Massachusetts, which applies to loans of $6,000 or less, and in addition to being illegal, they made the loans on unaffordable titles for many consumers. More than 1,800 consumers defaulted and saw their loans go into collection, and hundreds of consumers ultimately lost their vehicles to repossession.

The investigation also revealed that in the event of borrower default, NH Title Group, Inc. frequently pursued consumers with excessive phone calls and emails to collect debts, in violation of the Debt Collection Regulations of the Attorney General. Additionally, since title loans already violated the state’s Small Dollar Loans Act and were therefore considered void, any attempt to collect a debt from them is illegal.

It was also discovered that, in some cases, NH Title Group, Inc. failed to send consumers pre-repossession notices as required by state law. These notices offer borrowers the opportunity to remedy defaults or catch up on missed payments within 21 days to avoid repossession.

Under the terms of the settlement, NH Title Group, Inc. will pay $500,000 in damages and penalties and has waived more than $400,000 in outstanding loan balances and post-repossession obligations. He removed all liens on motor vehicles that served as collateral for his loans. The company will also be permanently prohibited from engaging in consumer lending, service or debt collection activities in Massachusetts.

The GA Office offers the following advice to people considering taking out a loan:

• Beware of any loan that originates only online. Know your lender and where they are physically located.
• Beware of a quick money promise. These offers usually come with very high and illegal interest rates.
• Know and understand what you agree to, in writing, before finalizing any engagement. Always request and retain a copy of any agreement for your records.

Payday loans and automatic title loans are expensive alternatives for short-term cash flow needs. Auto title lending puts your automobile – an important asset – at risk. Before considering these types of loans, consumers should explore other alternatives, including:

• Contact your local bank or credit union for a short-term loan;
• Ask your employer for an advance on your salary;
• Find out if you can delay paying an interest-free bill like a utility bill and make payment arrangements with the company;
• Ask your creditor for additional time to pay your bills or to change the terms of your contract;
• Contact an accredited consumer credit counseling agency in your area, such as Consumer Credit Counseling Service at (800) 388-2227 or American Consumer Credit Counseling at (800) 769-3571. The advisor can advise you on how to get out of debt and avoid predatory lending
• Obtain a cash advance from a credit card;
• Contact the Banking Division to determine if a lender is licensed to do business in Massachusetts at their Consumer Helpline at 1-800-495-BANK (2265), ext. 501.

AG Healey has already taken action against illegal car loans. In 2017, the AG’s office won a judgment reversing hundreds of illegal loans held by an online auto title lender. The AG office continues to be active in this area and wants to hear from Massachusetts consumers who have information regarding unfair or deceptive loans. The AG office encourages consumers concerned about illegal auto loans to call the office’s hotline at 617-727-8400 or file a complaint online.

This case was handled by Division Chief Shennan Kavanagh, Assistant Attorney General Jane Sugarman and paralegal Andrew Turnball of the AG’s Consumer Protection Division, with the assistance of Senior Investigator Edward Cherubin, of the AG’s Civil Investigations Division.