Spotsylvania Gold & Pawn, Inc.
Documents in this case
- Complaint · · 5 p.
- Stipulation · · 12 p.
Case summary
The
Consumer Financial Protection Bureau (CFPB) filed suit against Spotsylvania
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 20, 2017, which ordered
Spotsylvania Gold & Pawn to pay $20,209 in disgorgement and a $7,500 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.
Spotsylvania Gold & Pawn, Inc., Defendant.
CIVIL ACTION NO. __________ COMPLAINT The Consumer Financial Protection Bureau (Bureau) alleges the following against Spotsylvania 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 Spotsylvania 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 Spotsylvania Gold & Pawn is located, resides, and does business here. 28 U.S.C. § 1391(b)-(d); 12 U.S.C. § 5564(f). 3:16cv988 Case 3:16-cv-00988-MHL 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.
Spotsylvania Gold & Pawn is a Virginia corporation with its principal place of business in Virginia. Spotsylvania Gold & Pawn operates as a pawnbroker, issuing closed-end loans for consumers’ personal, family, or household purposes that are secured by personal property. Spotsylvania 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 1994 through the present, Spotsylvania Gold & Pawn has operated as a pawnbroker and, since 2003, has operated out of its store located at 5049 Jefferson Davis Highway, Fredericksburg, Virginia 22408.
7.
In connection with each loan, Spotsylvania Gold & Pawn charges a finance charge of an amount that varies with the size of the loan. Fees called “interest,” “storage,” and “ERF” make up the total finance charge. Each fee is charged as a condition of the extension of credit.
8.
Spotsylvania 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-00988-MHL 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 June 2013 through at least April 2015, Spotsylvania Gold & Pawn’s loan contracts described “annual percentage rate” as “[c]ost of your credit interest (only) per year.”
10.
From at least June 2013 through at least April 2015, Spotsylvania 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.
11.
The inaccurate APRs on Spotsylvania Gold & Pawn’s contracts underrepresented the true cost of the loans made to thousands of consumers. Count One Violations of TILA
12.
The Bureau realleges and incorporates by reference paragraphs 1-11. 13.
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.
14.
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). 15.
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). 16.
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).
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17.
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).
18.
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).
19.
The “interest,” “storage,” and “ERF” fees charged by Spotsylvania 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).
20.
In the course of extending closed-end credit, Spotsylvania Gold & Pawn used credit agreements that did not include an accurate description of the APR, as required by Regulation Z. 12 C.F.R. § 1026.18(e).
21.
In the course of extending closed-end credit, Spotsylvania 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. 22.
Spotsylvania 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
23.
The Bureau realleges and incorporates by reference paragraphs 1-11. 24.
Spotsylvania 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).
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Demand for Relief
Wherefore, the Bureau requests that the Court: 1.
enjoin Spotsylvania Gold & Pawn from committing future violations of TILA and the CFPA;
2.
award restitution;
3.
award damages or other monetary relief; 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-00988-MHL 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.
Spotsylvania Gold & Pawn, Inc., Defendant.
CIVIL ACTION N03:16-cv-00988 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 Spotsylvania Gold & Pawn, Inc. (Spotsylvania). The Complaint alleges violations ofthe Truth in Lending Act (TILA), 15 U.S.C. § 1601, 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 respectivecounsel,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 hasjurisdiction over the parties and the subject matter of this action, and venue is proper in this district.
2.
The parties agree to entry of this Order, withoutadjudication of any issueof fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint to the Effective Date of this Order.
3.
Defendant neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order.For purposes of this Order,Defendantadmitsonly thosefacts 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 ofCivil Procedure and waives all rights to seek judicial review or otherwise challenge or contest the validity ofthis Order.
5.
The relief provided in this Order is appropriate and available under §§ 1054 and 1055 of 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 have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. 7.
Each party will bear its own costs and expenses, including, without limitation, 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 Spotsylvania between January 1, 2013, and the date of this Order. 10. “APR” or “Annual Percentage Rate” means “a measure of the cost of credit,
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 Spotsylvania 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 behalf of one or more consumers or an enforcement action by another governmental agency brought against Spotsylvania based on substantially the same facts as described in the Complaint.
ORDER A. Conduct Relief
16. Spotsylvania and its officers, agents, servants, employees, attorneys, and all other persons who are in active concert or participation with them and who have actual notice of 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, et seq., 12 C.F.R. pt. 1026. Spotsylvania, whether acting directly or indirectly, is permanently restrained from:
a. issuing consumer-finance contracts that disclose an incorrect APR; and
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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 U.S.C. § 1601, etseq., 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 Spotsylvania in the amount of$20,209.48.
18.
Spotsylvania is ordered to pay $20,209.48 in two payments of $10,104.74 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 ofa 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.
Spotsylvania must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law, and no part ofthe funds may be returned to Spotsylvania. 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 Spotsylvania in the amoimt of$7,500.00.
21.
This civil money penalty is imposed based on the alleged violations oflaw described in the Complaint.
22.
Within fourteen calendar days of the Effective Date, Spotsylvania 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. Spotsylvania must relinquish all dominion, control, and title to Case 3:16-cv-00988-MHL Document 5 Filed 03/20/17 Page 4 of 12 PageID# 15
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the funds paid to the fullest extent permitted by law, and no part of the funds may be returned to Spotsylvania.
23.
The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund ofthe Bureau pursuant to § 1017(d) ofthe CFPA, 12 U.S.C. § 5497(d). 24.
Spotsylvania 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, Spotsylvania 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, Spotsylvania may not argue that Spotsylvania is entitled to, nor may Spotsylvania benefit from, any offset or reduction ofany compensatory monetary remedies imposed in the Related Consumer Action because ofthe civil money penalty paid in this action (Penalty Offset). Ifthe court or tribunal in any Related Consumer Action grants a Penalty Offset, Spotsylvania must, within 30 calendar days after entry ofa final order granting the Penalty Offset, notify the Bureau and pay the amount ofthe 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. Case 3:16-cv-00988-MHL Document 5 Filed 03/20/17 Page 5 of 12 PageID# 16
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D.
Default or Delinquency 26.
In the event ofany default on Spotsyivania'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 ofdefault to the date ofpayment and will immediately become due and payable.
27.
Under 31 U.S.C. § 7701, Spotsylvania must furnish to the Bureau its taxpayer identifying number, which may be used for purposes ofcollecting and reporting on any delinquent amount arising out of this Order.
E.
Reporting Requirements 28.
For five years from the Effective Date, Spotsylvania 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 ofa successor company; the creation or dissolution ofa subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing ofany bankruptcy or insolvency proceeding by or against Spotsylvania; or a change in Spotsyivania's name or address. Spotsylvania 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 ofthe Effective Date, Spotsylvania 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 Spotsylvania. 30.
Within 90 days of the Effective Date, and again one year after the Effective Date, Spotsylvania 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 Spotsylvania'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 ofthe Effective Date, Spotsylvania must submit to the Enforcement Director an acknowledgment ofreceipt ofthis Order, sworn under penalty of perjury.
32.
Within 30 days ofthe Effective Date, Spotsylvania must deliver a copy ofthis Order to each of its board members and executive officers, as well as any persons with responsibilities related to the injunctive reliefdescribed 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, Spotsylvania must deliver a copy ofthis 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 rehef described in Section A ofthis Order, before they assume their responsibilities. 34.
Should Spotsylvania seek to transfer or assign all or part of its operations that are subject to this Consent Order, Spotsylvania must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions ofthis Consent Order.
35.
Spotsylvania 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 the Case 3:16-cv-00988-MHL Document 5 Filed 03/20/17 Page 7 of 12 PageID# 18
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E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery of the Order, from all persons receiving a copy of this Order under this Section. G.
Recordkeeping 36.
Spotsylvania 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 Consumers; and b.
all consumer-finance contracts.
37.
Upon request by the Bureau, Spotsylvania must make the documents identified in paragraph 36 available to the Bureau within 30 days. H.
Notices to the Bureau 38.
Unless otherwise directed in writing by the Bureau, Spotsylvania must provide to the Bureau all submissions, requests, communications, or other documents required by this Order in writing, with the subject line, "Consumer Financial Protection Bureau v. Spotsylvania Gold & Pawn, Inc., File No. 2016-1674-02," by email to [email protected], and contemporaneously 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 five years from the Effective Date, Spotsylvania must cooperate fully with the Bureau in this matter and in any investigation related to or associated with the conduct described in the Complaint. Spotsylvania must provide truthful and complete information, evidence, and Case 3:16-cv-00988-MHL Document 5 Filed 03/20/17 Page 8 of 12 PageID# 19
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testimony. Spotsylvania 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 Spotsylvania, and Spotsylvania 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, Spotsylvania must permit Bureau representatives to interview any employee or other person affiliated with Spotsylvania 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, Spotsylvania agrees to be subject to the Bureau’s supervisory authority under 12 U.S.C. § 5514. Consistent with 12 C.F.R. § 1091.111, Spotsylvania may not petition for termination of supervision under 12 C.F.R. § 1091.113.
44. The Bureau releases and discharges Defendant Spotsylvania 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 Spotsylvania or
its affiliates to establish a pattern or practice of violations or the continuation of a pattern or
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practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the 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 of construction,
modification, and enforcement of this Order.
IT IS SO ORDERED.
Dated nib tay of Mixch 2017. Isf_ |} Ko= M. Hannah Lauck
United States District Judge
UNITED STATES DISTRICT JUDGE
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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. Mil 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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Nichols Zauzig Sandier P.C.
12660 Lake Ridge Drive Woodbridge,VA 22192 E-mail: [email protected] Tel: (703) 492-3300 Fax: (703)492-4201 Attorney for Defendant Spotsylvania Gold & Pawn, Inc.
F. Nick S (VSB No. 493507) Case 3:16-cv-00988-MHL Document 5 Filed 03/20/17 Page 12 of 12 PageID# 23