A soldier based at Fort Benning, Ga. has sued an Atlanta-based payday and title lending company and a subsidiary, claiming abusive practices that violate federal law. Staff Sgt. Jason Cox alleges in his lawsuit that he borrowed $3,000 from Alabama Title Loans against the title of his 2002 Dodge Durango. It’s alleged that the lender, a subsidiary of Atlanta-based Community Loans of America, charged him an interest rate three times that allowed by the Military Lending Act. The loan rolled over several times, and the debt escalated to $4,500 over several months. Sgt. Cox was unable to keep up payments, and the sport utility vehicle was repossessed in August from base housing on the Army post, which is located outside Columbus, Ga.
The suit, which ironically was filed on Veterans Day in U.S. District Court in Columbus, seeks class action status. Sgt. Cox’s lawyers include former Georgia Gov. Roy Barnes, who during his term as governor, cracked down on abusive practices by payday lenders and championed a law he later signed that also curbed abusive mortgage practices.
The Military Lending Act was enacted in 2007, after a report by the Department of Defense found that 17% of service members used payday loans and that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.” The Act, among other things, caps the annual percentage rate on a loan to armed service members at 36%.
It’s alleged in the suit that Sgt. Cox was charged an APR of more than 100% and that loans made in violation of the Military Lending Act are void from the beginning. The suit alleges further that while Sgt. Cox provided the lender a military ID, he was not informed of his rights under the law. There are more than 900 title loan offices under the Community Loans of America umbrella of companies in 22 states, according to the suit. I wish Sgt. Cox the very best in his lawsuit. If what he alleges is correct – and I have every reason to believe it is – he should win and the payday lender should be punished severely.
Source: Atlanta Journal Constitution
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