FirstCash owns and operates pawn stores in the United States and Latin America. Through its pawn stores, FirstCash provides non-recourse pawn loans and buys merchandise from customers to allow them to meet short-term cash needs. In September 2016, FirstCash finalized its merger with pawnshop provider and payday lender Cash America International, Inc. (Cash America). In November 2013, Cash America entered into a Consent Order with the Consumer Financial Protection Bureau (CFPB) for making loans to covered members of the military or their dependents in violation of the Military Lending Act (MLA), violations relating to debt collection, failure to prevent or timely detect problematic conduct due to inadequate internal compliance, and failure to maintain required records (the Order). In the Order, Cash America agreed to cease and desist from the violations and to implement a plan designed to ensure its future compliance with the terms of the Order. The CFPB fined Cash America $5 million and ordered it to deposit $8 million into an account in order to provide redress to affected consumers. The FirstCash class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) FirstCash had made more than 3,600 loans to over 1,000 active-duty members of the military and their families at usurious interest rates above 36% and often exceeding 200% in violation of the MLA and the Order; (ii) FirstCash had failed to implement the remedial measures imposed by the Order; (iii) FirstCashs financial results were, in substantial part, the product of FirstCashs violations of the MLA and the Order; and (iv) as a result, FirstCash was exposed to a material undisclosed risk of legal, reputational, and financial harm if FirstCashs violations of the MLA and the Order were ever publicly disclosed. On November 12, 2021, the CFPB announced that it had filed a complaint against FirstCash for violations of the MLA and the Order. The CFPB complaint alleged that between June 2017 and May 2021 (the only period for which the Bureau currently has Defendants transactional data), [FirstCash and its subsidiary Cash America West, Inc.] together made over 3,600 pawn loans to more than 1,000 covered borrowers in Arizona, Nevada, Utah, and Washington. The CFPB found that, in all of the loans at issue, FirstCash imposed interest rates over 36%, with rates frequently exceeding 200%. Additionally, the CFPB found that FirstCashs usurious loan practices had been ongoing since at least October 2016 in violation of the Order. A CFPB release describing the agency’s action against FirstCash stated that FirstCash had cheated and gouged military families and robbed them of their rights to go to court. On this news, the price of FirstCash common stock declined approximately 28% the following two trading days, damaging investors.
For More information as well as to join this case please contact Atara Twersky, Esq. at atara@twerskylawgroup.com or atwersky@aftlaw.com. Atara is Principal at Twersky Law Group and Of counsel at AF&T law firm where she is director of Investor Services. Atara focuses her practice on assisting her clients with increasing their investment portfolio recoveries and ensuring that their portfolios remain healthy and robust. For more information on shareholder recoveries click here and to listen to Atara’s podcast with notable guests in the Pension fund Industry listen to Pension and Investments Podcast, on all matters related to your investment portfolio and more. For more information on Atara and her legal work connected to shareholder protection click here.
