Fredericksburg Gold & Pawn, Inc.
Documents in this case
- Complaint · · 5 p.
- Stipulation · · 12 p.
Case summary
The
Consumer Financial Protection Bureau (CFPB) filed suit against Fredericksburg
Gold & Pawn, Inc. on December 19, 2016, alleging that the company broke the
law by misstating the actual annual costs of its pawn loans. The court entered
a Stipulated Final Judgment and Order on March 16, 2017, which ordered
Fredericksburg Gold & Pawn to pay $24,570 in disgorgement and a $5,000 civil
money penalty.
Complaint ()
PDF of this document (5 pages)
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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division Consumer Financial Protection Bureau, Plaintiff, v.
Fredericksburg Gold & Pawn, Inc., Defendant.
CIVIL ACTION NO. __________ COMPLAINT The Consumer Financial Protection Bureau (Bureau) alleges the following against Fredericksburg Gold & Pawn, Inc.
Introduction 1.
The Bureau brings this action under § 1054 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5564, and § 108 of the Truth in Lending Act (TILA), 15 U.S.C. § 1607(a)(6), based on Fredericksburg Gold & Pawn’s failure to disclose an accurate annual-percentage rate on closed-end pawn contracts, in violation of TILA, 15 U.S.C. § 1601, et seq., and its implementing regulation, Regulation Z, 12 C.F.R. part 1026, and § 1036(a)(1)(A) of the CFPA, 12 U.S.C. § 5536(a)(1)(A).
Jurisdiction and Venue 2.
This Court has subject-matter jurisdiction over this action because it is brought under “Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345. 3.
Venue is proper in this district because Fredericksburg Gold & Pawn is located, resides, and does business here. 28 U.S.C. § 1391(b)-(d); 12 U.S.C. § 5564(f). 3:16cv987 Case 3:16-cv-00987-REP Document 1 Filed 12/19/16 Page 1 of 5 PageID# 1
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Parties 4.
The Bureau is an agency of the United States created by the CFPA and charged with regulating the offering and providing of consumer-financial products and services under federal consumer-financial laws. 12 U.S.C. § 5491(a). It has independent litigating authority, including the authority to enforce the regulations promulgated under TILA. 15 U.S.C. § 1607. See 12 U.S.C. § 5564(a)-(b); see also 12 U.S.C. § 5481(12)(O), (14) (defining “Federal consumer financial law” to include TILA).
5.
Fredericksburg Gold & Pawn is a Virginia corporation with its principal place of business in Virginia. Fredericksburg Gold & Pawn operates as a pawnbroker, issuing closed-end loans for consumers’ personal, family, or household purposes that are secured by personal property. Fredericksburg Gold & Pawn offers or provides a consumer-financial product or service under the CFPA, 12 U.S.C. §§ 5481(5)(A), (15)(A)(i), and is thus a “covered person” under the CFPA, 12 U.S.C. § 5481(6)(A).
Facts 6.
From 1989 through the present, Fredericksburg Gold & Pawn has operated as a pawnbroker out of its store located at 447 Jefferson Davis Highway, Fredericksburg, Virginia 22401.
7.
In connection with each loan, Fredericksburg Gold & Pawn charges a finance charge of an amount that varies with the size of the loan. Fees for “interest,” “storage,” and “miscellaneous” make up the total finance charge. Each fee is charged as a condition of the extension of credit.
8.
Fredericksburg Gold & Pawn’s loan contracts disclose the following terms with associated values in prominent boxes under the heading “Truth in Lending”: “maturity date,” Case 3:16-cv-00987-REP Document 1 Filed 12/19/16 Page 2 of 5 PageID# 2
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“amount financed,” “finance charge,” “total of payments,” “annual percentage rate,” and “payment schedule.”
9.
From at least January 1, 2013, through at least September 2015, Fredericksburg Gold & Pawn disclosed an incorrect “annual percentage rate,” or APR, on most of its contracts, understating the APRs by as much as half of the accurate rate. 10.
The inaccurate APRs on Fredericksburg Gold & Pawn’s contracts underrepresented the true cost of the loans made to thousands of consumers. Count One Violations of TILA
11.
The Bureau realleges and incorporates by reference paragraphs 1-10. 12.
TILA and Regulation Z require that certain material disclosures be provided to a consumer before consummation of a loan contract. 15 U.S.C. § 1638(a)-(b); 12 C.F.R. § 1026.17(a)-(b), 1026.18.
13.
Among the required material disclosures in a closed-end credit transaction are the finance charge and APR. 15 U.S.C. §§ 1602(v), 1638(a)(3)-(4); 12 C.F.R. § 1026.18(d)-(e). 14.
The finance charge is generally “the sum of all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit.” 15 U.S.C. § 1605(a). 15.
Regulation Z requires that a contract for closed-end credit disclose the finance charge, “using that term, with a brief description such as ‘the dollar amount the credit will cost you.’” 12 C.F.R. § 1026.18(d).
16.
The APR is “a measure of the cost of credit, expressed as a yearly rate.” 12 C.F.R. § 1026.22(a)(1); see also 15 U.S.C. § 1606(a).
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17.
Regulation Z requires that a contract for closed-end credit disclose the APR, “using that term, with a brief description such as ‘the cost of your credit as a yearly rate.’” 12 C.F.R. § 1026.18(e).
18.
The “interest,” “storage,” and “miscellaneous” fees charged by Fredericksburg Gold & Pawn are all incident to the extension of credit and part of the finance charge required to be disclosed to consumers and included in calculation of the APR disclosed to consumers. 15 U.S.C. §§ 1605(a), 1606(a), 1638(a)-(b); 12 C.F.R. §§ 1026.4(a), 1026.18, 1026.22; 12 C.F.R. pt. 1026, Supp. I (Comment 17(c)(1)-18).
19.
In the course of extending closed-end credit, Fredericksburg Gold & Pawn used credit agreements that inaccurately disclosed the APR required by TILA and Regulation Z. 15 U.S.C. §§ 1605(a), 1606(a), 1638(a)-(b); 12 C.F.R. § 1026.18(d)-(e); 12 C.F.R. § 1026.22. 20.
Fredericksburg Gold & Pawn therefore violated TILA and Regulation Z. 15 U.S.C. §§ 1605(a), 1606(a), 1638(a)-(b); 12 C.F.R. § 1026.18(d)-(e); 12 C.F.R. § 1026.22. Count Two Violations of the CFPA
21.
The Bureau realleges and incorporates by reference paragraphs 1-10. 22.
Fredericksburg Gold & Pawn’s violations of TILA and Regulation Z, alleged in Count One, constitute violations of the CFPA. 12 U.S.C. § 5536(a)(1)(A). Demand for Relief
Wherefore, the Bureau requests that the Court:
1.
enjoin Fredericksburg Gold & Pawn from committing future violations of TILA and the CFPA;
2.
award restitution;
3.
award damages or other monetary relief;
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4.
order disgorgement of ill-gotten gains; 5.
award a civil-money penalty; 6.
award costs; and 7.
award additional relief as the Court may determine to be just and proper. Dated: December 19, 2016 Respectfully submitted, ANTHONY M. ALEXIS Enforcement Director JEFFREY PAUL EHRLICH Deputy Enforcement Director /s/ Kara K. Miller KARA K. MILLER (Virginia Bar No. 47821) Assistant Litigation Deputy Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 Tel.: (202) 435-7825 Fax: (202) 435-7329 [email protected] DONALD R. GORDON (D.C. Bar 482384) Senior Litigation Counsel Consumer Financial Protection Bureau 140 E. 45th St.
New York, NY 10021 Tel.: (212) 328-7011 [email protected] Attorneys for Plaintiff Consumer Financial Protection Bureau Case 3:16-cv-00987-REP Document 1 Filed 12/19/16 Page 5 of 5 PageID# 5
Stipulation ()
PDF of this document (12 pages)
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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division Consumer Financial Protection Bureau, Plaintiff, V.
Fredericksburg Gold & Pawn, Inc., Defendant.
CIVIL ACTION NO. 3:16-cv-00987 STIPULATED FINAL JUDGMENT AND ORDER The Consumer Financial Protection Bureau filed this civil action on December 19, 2016, to obtain injunctive relief, restitution, disgorgement, civil money penalties, and other equitable reliefagainst Fredericksburg Gold & Pawn, Inc. (Fredericksburg). The Complaint alleges violations of the Truth in Lending Act (TILA), 15 U.S.C. § 1601, e/ seq., its implementing regulation. Regulation Z, 12 C.F.R. pt.l026, and § 1036(a)(1)(A)of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5536(a)(1)(A), for failure to disclose an accurate annual-percentage rate on contracts for closed-end pawn loans. The parties, by and through their respective counsel, agree to the entry ofthis Stipulated Final Judgment and Order (Order).
THEREFORE, it is ORDERED:
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FINDINGS AND CONCLUSIONS 1.
This Court has jurisdiction over the parties and the subject matter of this action, and venue is proper in this district.
2.
The parties agree to entry ofthis Order, without adjudication ofany issue offact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint to the Effective Date ofthis Order.
3.
Defendant neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order. For purposes of this Order, Defendant admits only those facts in the Complaint necessary to establish the Court's jurisdiction over Defendant and the subject matter of this action.
4.
Defendant waives service under Rule 4(d) of the Federal Rules of Civil Procedure and waives all rights to seekjudicial reviewor otherwisechallengeor contest the validity ofthis Order.
5.
The reliefprovided in this Order is appropriate and available under §§ 1054 and 1055of the CFPA, 12 U.S.C. §§ 5564, 5565, and §§ 108 and 128 ofTILA, 15 U.S.C. §§ 1607, 1638.
6.
Defendant waives any claim it may haveunder the Equal Access to Justice Act, 28 U.S.C. § 2412, concerningthe prosecutionof this action to the date ofthis Order. 7.
Eachparty will bear its own costsand expenses, including, withoutlimitation, attorneys' fees.
8.
Entry of this Order is in the public interest.
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DEFINITIONS 9.
"Affected Consumers" means consumers who entered a contract for a pawn loan from Fredericksburg between January 1, 2013, and the date of this Order. 10.
"APR" or "Annual Percentage Rate" means "a measure of the cost ofcredit, expressed as a yearly rate," as described in 12 C.F.R. § 1026.22(a)(1). 11.
"Bureau" means the Consumer Financial Protection Bureau. 12.
"Defendant" means Fredericksburg Gold & Pawn, Inc., and its successors and assigns.
13.
"Effective Date" means the date this Order is entered. 14.
"Enforcement Director" means the Assistant Director for the Office of Enforcement of the Consumer Financial Protection Bureau, or his or her delegee. 15.
"Related Consumer Action" means a private action by or on behalfof one or more consimiers or an enforcement action by another governmental agency brought against Fredericksburg based on substantially the same facts as described in the Complaint. ORDER A.
Conduct Relief 16.
Fredericksburg and its officers, agents, servants, employees, attorneys, and all otherpersonswho are in active concertor participation with themand who have actualnoticeof this Order, whether acting directly or indirectly, may not violate and must take reasonable measures to ensure that its service providers, affiliates, and other agents do not violate TILA and Regulation Z, 15 U.S.C. § 1601, etseq., 12 C.F.R. pt. 1026. Fredericksburg, whether acting directly or indirectly, is permanently restrained from: a.
issuing consumer-finance contracts that disclose an incorrect APR; and Case 3:16-cv-00987-REP Document 5 Filed 03/16/17 Page 3 of 12 PageID# 14
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b. issuing consumer-finance contracts that do not fully and accurately
disclose all information required by TILA and Regulation Z in the manner required, 15
ULS.C. § 1601, et seq., 12 C.F.R. pt. 1026.
Nothing in this Order shall be read as an exception to this paragraph. B. Order to Pay Disgorgement
17. | Judgment for monetary relief is hereby entered in favor of the Bureau and against Fredericksburg in the amount of $24,570.08.
18. Fredericksburg is ordered to pay $24,570.08 in two payments of $12,285.04 each, the first within 60 calendar days of the Effective Date, and the second within 90 calendar days of the Effective Date, each in the form of a wire transfer to the Bureau or to such agent as the Bureau may direct, in accordance with wiring instructions to be provided by counsel for the Bureau. The Bureau will deposit the payments in the United States Treasury as disgorgement.
19. Fredericksburg must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law, and no part of the funds may be returned to Fredericksburg. C. Order to Pay Civil Money Penalties
20. Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), taking into account the factors in 12 U.S.C. § 5565(c)(3), judgment for a civil penalty is entered against Fredericksburg in the amount of $5,000.00.
21. This civil money penalty is imposed based on the alleged violations of law described in the Complaint.
22. Within fourteen calendar days of the Effective Date, Fredericksburg must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with
the Bureau’s wiring instructions. Fredericksburg must relinquish all dominion, control, and title
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to the funds paid to the fullest extent permitted by law, and no part of the funds may be returned to Fredericksburg.
23. The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau pursuant to § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).
24. Fredericksburg must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Fredericksburg may not:
a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or
b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment under any insurance policy, for any civil money penalty paid under this Order.
25. To preserve the deterrent effect of the civil money penalty, in any Related Consumer Action, Fredericksburg may not argue that Fredericksburg is entitled to, nor may Fredericksburg benefit from, any offset or reduction of any compensatory monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action (Penalty Offset). If the court or tribunal in any Related Consumer Action grants a Penalty Offset, Fredericksburg must, within 30 calendar days after entry of a final order granting the Penalty Offset, notify the Bureau and pay the amount of the Penalty Offset to the United States Treasury. Such a payment will not be considered an additional civil money penalty and will not change the
amount of the civil money penalty imposed in this action.
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D. Default or Delinquency
26. In the event of any default on Fredericksburg’s obligations to make payment to the Bureau under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amount not paid from the date of default to the date of payment and will immediately become due and payable.
27. Under 31 U.S.C. § 7701, Fredericksburg must furnish to the Bureau its taxpayer identifying number, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
E. Reporting Requirements
28. For five years from the Effective Date, Fredericksburg must notify the Bureau of any development that may affect compliance obligations arising under this Order, including, but not limited to: a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Fredericksburg; or a change in Fredericksburg’s name or address. Fredericksburg must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner.
29. Within 21 days of the Effective Date, Fredericksburg must designate and provide to the Bureau at least one telephone number and an email, physical, and postal address as points of contact that the Bureau may use to communicate with Fredericksburg.
30. Within 90 days of the Effective Date, and again one year after the Effective Date, Fredericksburg must submit to the Enforcement Director an accurate written compliance-
progress report (Compliance Report), that, at a minimum:
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a. describes in detail Fredericksburg’s compliance with this Order; and b. attaches a copy of each Order Acknowledgment obtained under Section F
of this Order, unless previously submitted to the Bureau. F. Order Distribution and Acknowledgement
31. Within seven days of the Effective Date, Fredericksburg must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.
32. Within 30 days of the Effective Date, Fredericksburg must deliver a copy of this Order to each of its board members and executive officers, as well as any persons with responsibilities related to the injunctive relief described in Section A of this Order, whether they are managers, employees, service providers, or other agents or representatives.
33. For five years from the Effective Date, Fredericksburg must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section E, any future board members and executive officers, as well as to any managers, employees, service providers, and other agents or representatives who will have responsibilities related to the injunctive relief described in Section A of this Order, before they assume their responsibilities.
34. Should Fredericksburg seek to transfer or assign all or part of its operations that are subject to this Consent Order, Fredericksburg must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions of this Consent Order.
35. Fredericksburg must secure a signed and dated statement acknowledging receipt
of a copy of this Order, ensuring that any electronic signatures comply with the requirements of
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the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery ofthe Order, from all persons receiving a copy of this Order under this Section. G.
Recordkeeping 36.
Fredericksburg must retain, for at least five years from the Effective Date, all documents and records necessary to demonstrate full compliance with each provision ofthis Order, including:
a.
all documents and records pertaining to the Affected Consimiers; and b.
all consumer-finance contracts.
37.
Upon request by the Bureau,Fredericksburg must make the documents identified in paragraph36 available to the Bureau within 30 days H.
Notices to the Bureau 38.
Unless otherwise directed in writing by the Bureau, Fredericksburg must provide to the Bureauall submissions, requests, communications, or other documents required by this Order inwriting, withthesubject line, "Consumer Financial Protection Bureau v. Fredericksburg Gold & Pawn, Inc., File No. 2016-1678-02," by email to Enforcement_Compliance@c^b.gov, and by first-class mail to:
Assistant Director for Enforcement Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1700 G Street, N.W.
Washington D.C. 20552.
I.
Cooperation with the Bureau 39.
For fiveyears from the Effective Date, Fredericksburg mustcooperate fullywith the Bureau in this matter and in any investigation related to or associated with the conduct described in the Complaint.Fredericksburg must providetruthful and complete information. Case 3:16-cv-00987-REP Document 5 Filed 03/16/17 Page 8 of 12 PageID# 19
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evidence, and testimony. Fredericksburg must require its officers, employees, representatives, or agents to appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 14 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.
J. Compliance Monitoring
40. For five years from the Effective Date, for purposes of compliance monitoring, the Bureau may communicate directly with Fredericksburg, and Fredericksburg may, at its election, have counsel present during such communications and may consult with counsel prior to responding to such communications.
41. For five years from the Effective Date, Fredericksburg must permit Bureau representatives to interview any employee or other person affiliated with Fredericksburg who has agreed to such an interview. The person interviewed may have counsel present.
42. Nothing in this Order limits the Bureau’s lawful use of compulsory process under 12 U.S.C. § 5526 and 12 C.F.R. § 1080.6.
43. For five years from the Effective Date, Fredericksburg agrees to be subject to the Bureau’s supervisory authority under 12 U.S.C. § 5514. Consistent with 12 C.F.R. § 1091.11], Fredericksburg may not petition for termination of supervision under 12 C.F.R. § 1091.113.
44. The Bureau releases and discharges Defendant Fredericksburg from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knew about them as of the Effective Date. Notwithstanding this release, the Bureau may use the practices alleged in the Complaint in future enforcement actions against Fredericksburg
or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or
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practice ofviolations or to calculate the amount ofany penalty. This release does not preclude or affect any right ofthe Bureau to determine and ensure compliance with the Order or to seek penalties for any violation of the Order.
K.
Retention of Jurisdiction 45.
The Court shall retain jurisdiction of this matter for purposes ofconstruction, modification, and enforcement of this Order.
IT IS SO ORDERED.
Dated this _)Jday of March ,2017.
/s/ felCT JUDC UNITED STATES DISTRICT JUDGE ROBERT E.
PAYNE Case 3:16-cv-00987-REP Document 5 Filed 03/16/17 Page 10 of 12 PageID# 21
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Consented and agreed to:
FOR THE CONSUMER FINANCIAL PROTECTION BUREAU: ANTHONY M. ALEXIS Assistant Director for Enforcement JEFFREY PAUL EHRLICH Deputy Assistant Director for Enforcement lRA K. MILLER (VSB No. 47821) Assistant Litigation Deputy DONALD R. GORDON (D.C. Bar No. 482384)' Senior Litigation Counsel Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 E-mail: [email protected] Tel.: (202) 435-7825 Fax: (202) 435-7329 Attorneys for Plaintiff Consumer Financial Protection Bureau Admitted pro hac vice.
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FOR DEFE P^tCL F. NICMQj;8l;VSB No. 493507) lichols Zauzig ^ndler P.C. 12660 Lake Ridge Drive Woodbridge, VA 22192 E-mail: [email protected] Tel: (703) 492-3300 Fax: (703)492-4201 Attorneys for Defendant Fredericksburg Gold & Pawn, Inc. Case 3:16-cv-00987-REP Document 5 Filed 03/16/17 Page 12 of 12 PageID# 23