CITY OF CARSON – Nevada on Wednesday asked the state Supreme Court to overturn a district court order that an auto title lender did not use the refinancing to circumvent limits of state law.
At the root of the problem are state consumer protection laws that limit title loans to 210 days and prohibit a loan from exceeding the fair market value of the vehicle.
TitleMax filed a lawsuit against the Financial Institutions Division of the Nevada Department of Business and Industry in 2019, and Clark County District Judge Jerry Wiese ruled in its favor. The state appealed Wiese’s decision.
“TitleMax, in this case, is like the teenager, insisting that the fiesta, party, and reunion he threw while his parents were away was not the party his parents forbade,” said Solicitor General Heidi Parry Stern. for the Nevada attorney general’s office.
TitleMax operates more than 1,000 offices in 16 states, providing high interest loans to consumers with their vehicles as collateral.
Stern argued that after the 210-day limit, TitleMax offers clients a new loan to extend the repayment term and increase the interest paid.
In some cases, customers end up paying 40% or more of the car’s value, said Peter Aldous, an attorney at the Legal Aid Center of Southern Nevada, who has represented about 45 clients on such loans.
“They are stuck in this cycle of money owed to TitleMax and cannot pay it back,” Aldous said. “They are so scared that their car will be taken back.”
TitleMax attorney Dan Polsenberg argued on Wednesday that refinancing is different from granting a loan and is protected by state law. He also argued that his clients are not required to include interest in their loans.
“It wouldn’t be the same ability to walk away and avoid getting into debt,” Polsenberg said.
This isn’t the first time that the state and TitleMax have gone head to head in court.
In 2019, the state Supreme Court ruled that the auto title lender violated Nevada law with a loan program that overcharged customers with interest payments twice the length of the law of l ‘State allows it.
The ruling partially overturned an earlier ruling by a state district court, which itself dismissed an administrative law judge’s finding that set aside more than 6,000 of the company’s loans and ordered refunds.
The Nevada Supreme Court is still ruling on the new case.