The state of Oregon filed a lawsuit against Liquidation LLC for allegedly operating an illegal car title scam, said Oregon Attorney General Ellen Rosenblum. | Shutterstock

TAMPA – Consumer advocates are brushing up on new tactics of predatory lenders so they can once again beat back the businesses waiting to take advantage of some of the most vulnerable individuals.

When a person who owns his or her vehicle is strapped for cash, some money lenders will provide a loan, using the person’s car as collateral. The type of loan is commonly referred to as a car-title loan, and they’re considered risky because of high interest rates and short repayment plans. Typically, they have to be repaid in 30 days.

After a state law passed in 2000 put restrictions on car-title loans – in part, by capping interest rates – the number of lenders dropped, Alice Vickers, director of the Tampa-based Florida Alliance for Consumer Protection, told the Florida Record. But they’ve started to crop up again, operating under Florida installment loans provisions and selling a collection of “useless” products to make money.

“Car title loans, I think, are clearly predatory, and the Florida Legislature has repeatedly repelled the industry because their collective judgment is that they’re just too dangerous as a loan product because they’re used by low-income consumers, and (consumers) stand to lose their car if they don’t make their payments,” Vickers said.

For a person or family already on the edge financially, losing their car can start a “cascade of catastrophes,” she explained. If a person no longer has transportation to get to work, the job might be the next thing lost.

“Years ago, when families lost their car … it began a domino effect for bad outcomes,” Vickers said.

Since car-title lenders have risen again in the state, Vickers has been getting her hands on as many contracts as she can figure out what tactics they’re using most often. The alliance has received more calls and complaints about these types of loans in the last few months. From the complaints, she learned that the lenders sell additional products, like car insurance.

“What I have heard from consumers is that you go in and you don’t have proof of your car insurance with you, but they require you to buy it to get that loan that day,” Vickers said. “We know from anecdotal information that they are pressuring consumers to buy the products. In some cases, they understand they have to buy these products to get the loan.”

Additionally, borrowers have to go in each month, which makes it look like they’re making payments in installments. But it appears they’re actually rolling the loan over, which likely includes additional fees.

“A $500 loan can very rapidly double and triple as they’re rewritten each month,” Vickers said.

Consumer advocates are working with people in the legitimate installment industry to come up with proposed legislation that would stop car-title lenders without hurting those legitimate lenders.

Filing claims in court isn’t out of the question but can be difficult because of arbitration agreements in the contracts, Vickers said. She hopes to see more litigation. In one suit, Janet and James Schmitt of St. Augustine are suing Instaloan, which is part of Georgia-based TMX Finance – the largest car-title lender in the country.

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