In early February, Virginia Attorney General Mark Herring and the Consumer Financial Protection Bureau announced that the agencies had reached a settlement with Woodbridge Coins and Jewelry Exchange, Inc. d/b/a Woodbridge Gold & Pawn (“Woodbridge Pawn”) to provide $56,763.60 in refunds to approximately 1,000 consumers. The CFPB and the AG’s Office alleged that the business broke the law by misstating to consumers the charges associated with pawn loans.
Specifically, Woodbridge Pawn was alleged to have violated Virginia statutes applicable to pawnbrokers, the Virginia Consumer Protection Act, and the federal Truth-in-Lending Act. In connection with its pawnbroking business, Woodbridge Pawn was issuing closed-end loans and would take possession of consumers’ personal property as security for the loans.
According to the formal complaint, during the period from at least March 27, 2015 through March 26, 2016, Woodbridge Pawn charged illegal interest and fees under the applicable pawnbroker statutes by charging interest at the monthly rate of seven percent on loans of $100, fees of three percent on all of its loans for maintenance of electronic records, and a monthly clerical fee on all loans that varied by the size of the loan.
In Virginia, pawnbroker statutes limit allowable interest rates to five percent on loans of $100. In addition, electronic record fees are capped at $3 on loans greater than $100. Finally, applicable Virginia statutes permit a five percent monthly storage fee.
The consent order requires Woodbridge Pawn to pay $79,000 in consumer relief and penalties and to discontinue allegedly deceptive disclosures. The settlement includes the following key terms:
- Payment of refunds totaling $56,763.60 to approximately 1,000 borrowers representing the amounts those borrowers paid beyond what Virginia’s pawnbroker statutes allow;
- Payment of a $5,000 civil penalty under the Consumer Financial Protection Act;
- Payment of $6,225.75 to the Attorney General for reimbursement of the Commonwealth’s reasonable expenses, costs, and attorneys’ fees; and
- A permanent injunction preventing Woodbridge Pawn from violating the Virginia statutes applicable to pawnbrokers, and the Virginia Consumer Protection Act.
A copy of the consent order is available here.