According to the FTC, First American Title Lending of Georgia and Finance Select Inc. didn’t inform customers fully about what they were getting into when they put their cars up as collateral for a quick loan.
Among the hidden facts: the potential for incredibly high interest rates and loss of the vehicle upon which the loan was based.
“This type of loan is risky for consumers because if they fail to pay, they could lose their car – an asset many of them can’t live without,” said Jessica Rich, director, FTC’s Bureau of Consumer Protection. “Without proper disclosures, consumers can’t know what they’re getting, so when we see deceptive marketing of these loans we’re going to take action to stop it.”
Here’s the skinny from the FTC:
“The FTC charged that First American Title Lending, which operates over 30 locations in Georgia, advertised a zero percent offer (in English and Spanish) and failed to disclose that the borrower had to meet specific conditions to receive that rate. The borrower had to be a new customer, repay the loan within 30 days, and pay with a money order or certified funds, not cash or a personal check. If a borrower failed to meet those conditions, the offer did not apply, and he or she would be required to pay a finance charge from the start of the loan. The company’s advertisements also failed to disclose the amount of the finance charge after the introductory period ended.”
The two companies were not hit with financial penalties, but are required to make full disclosure of all loan terms, including specifics about what it takes to qualify for the rate is advertises.