Tempo Venture, Inc., d/b/a Culpeper Pawnbroker

Documents in this case

• Complaint · 5 p.
• Stipulation · 11 p.

Case summary

The Consumer Financial Protection Bureau (CFPB) took action against Tempo Venture, Inc., doing business as Culpeper Pawnbroker, for deceiving consumers about the actual annual costs of its loans. The CFPB filed a complaint in federal court alleging that the company broke the law by misstating the APR associated with pawn loans. The CFPB also filed a consent order, which was entered by the court. The consent order imposes injunctive relief and requires Culpeper Pawnbroker to pay a $2,500 penalty.

Complaint

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA Charlottesville Division Consumer Financial Protection Bureau,

Plaintiff,

v.

Tempo Venture, Inc., d/b/a Culpeper Pawnbroker,

Defendant.

CIVIL ACTION NO. __________ COMPLAINT The Consumer Financial Protection Bureau (Bureau) alleges the following against Tempo Venture, Inc., d/b/a Culpeper Pawnbroker (Culpeper). 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 Culpeper’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. Case 3:17-cv-00075-NKM Document 1 Filed 10/17/17 Page 1 of 5 Pageid#: 1 10/17/2017 3:17-cv-00075

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3.

Venue is proper in this district because Culpeper is located, resides, and does business here. 12 U.S.C. § 5564(f).

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.

Tempo Venture, Inc., d/b/a Culpeper Pawnbroker, is a Virginia business with its principal place of business in Virginia. Culpeper operates as a pawnbroker, issuing closed-end loans for consumers’ personal, family, or household purposes that are secured by personal property. Culpeper 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 about 1999 through the present, Culpeper has operated as a pawnbroker out of its store located at 255 Southgate Shopping Center, Culpeper, Virginia, 22701. 7.

In connection with each loan, Culpeper charges a finance charge of an amount that varies with the size of the loan. Fees for “interest,” “service,” and “Misc” make up the total finance charge. Each fee is charged as a condition of the extension of credit. Case 3:17-cv-00075-NKM Document 1 Filed 10/17/17 Page 2 of 5 Pageid#: 2

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8.

Culpeper’s loan contracts disclose the following terms with associated values in prominent boxes under the heading “Truth in Lending”: “maturity date,” “amount financed,” “finance charge,” “total of payments,” “annual percentage rate,” and “payment schedule.” 9.

From at least September 2015 through at least April 2017, Culpeper disclosed an incorrect “annual percentage rate,” or APR, on its contracts, understating the APRs by as much as half of the accurate rate.

10.

The inaccurate APRs on Culpeper’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 disclosures be provided to a consumer before consummation of a consumer credit transaction. 15 U.S.C. § 1638(a)-(b); 12 C.F.R. § 1026.17(a)-(b), 1026.18.

13.

Among the required disclosures in a closed-end credit transaction are the finance charge and APR. 15 U.S.C. §§ 1638(a)(3)-(4); 12 C.F.R. § 1026.18(d)-(e). 14.

The finance charge is generally “the cost of consumer credit as a dollar amount” and “includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit.” 12 C.F.R. § 1026.4(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).

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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).

17.

Regulation Z requires the creditor in each closed-end credit transaction to disclose the APR, “using that term, and a brief description such as ‘the cost of your credit as a yearly rate.’” 12 C.F.R. § 1026.18(e).

18.

The “interest,” “service,” and “Misc” fees charged by Culpeper are all incident to or a condition of 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, Culpeper 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.

Culpeper 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.

Culpeper’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 Culpeper from committing future violations of TILA and the CFPA; 2.

award restitution;

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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: October 17, 2017

Respectfully submitted, ANTHONY M. ALEXIS Enforcement Director JEFFREY PAUL EHRLICH Deputy Enforcement Director s/ Kara K. Miller

Virginia Bar Number: 47821 Attorney for Plaintiff Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 Telephone: (202) 435-7825 Fax: (202) 435-7329 E-mail: [email protected] DONALD R. GORDON D.C. Bar Number: 482384 Attorney for Plaintiff Consumer Financial Protection Bureau 140 E. 45th St.

New York, NY 10021 Telephone: (212) 328-7011 E-mail: [email protected] Case 3:17-cv-00075-NKM Document 1 Filed 10/17/17 Page 5 of 5 Pageid#: 5

Stipulation

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; . CLERK'S OFFICE U.S. DIST. COURT IN THE UNITED STATES DISTRICT COURT FOR THE AT LYNCHBURG, VA

WESTERN DISTRICT OF VIRGINIA’ FILED Charlottesville Division OCT 2 / 2017 JULIA G-DUDLEY, C a ae B LERK Consumer Financial Protection Bureau, DEPUTY CLERK

Plaintiff, CIVIL ACTION NO. 3:17-cv-75-NKM V.

Tempo Venture, Inc., d/b/a Culpeper Pawnbroker,

Defendant.

STIPULATED FINAL JUDGMENT AND ORDER

The Consumer Financial Protection Bureau filed this civil action to obtain injunctive relief, restitution, disgorgement, civil money penalties, and other equitable relief against Tempo Venture, Inc., operating as Culpeper Pawnbroker. The Complaint alleges violations of the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., its implementing regulation, Regulation Z, 12 C.F.R. pt.1026, 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 of this 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 of this Order, without adjudication of any issue of 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, 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 seek judicial review or otherwise challenge or contest the validity of this 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 of TILA, 15 US.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. “APR” or “Annual Percentage Rate” means “a measure of the cost of credit, expressed as a yearly rate.” 12 C.F.R. § 1026.22(a)(1).

10. “Bureau” means the Consumer Financial Protection Bureau.

11. “Defendant” and “Culpeper Pawnbroker” mean Tempo Venture, Inc., operating as Culpeper Pawnbroker, and its successors and assigns.

12. “Effective Date” means the date this Order is entered.

13. “Enforcement Director” means the Assistant Director for the Office of Enforcement of the Consumer Financial Protection Bureau, or his or her delegee.

14. “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 Culpeper Pawnbroker based on substantially the same facts as described in the Complaint.

ORDER A. Conduct Relief

15. Culpeper Pawnbroker 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. §§ 1605(a), 1606, 12 C.F.R. §§ 1026.18, 1026.22. Culpeper Pawnbroker, whether acting directly or indirectly, is permanently restrained from:

a. issuing consumer-credit contracts that disclose an incorrect APR; and

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b. issuing consumer-credit 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, 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 Civil Money Penalties

16. 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 Culpeper Pawnbroker in the amount of $2,500.00.

17. This civil money penalty is imposed based on the alleged violations of law described in the Complaint.

18. Within fourteen calendar days of the Effective Date, Culpeper Pawnbroker 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. Culpeper Pawnbroker 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 Culpeper Pawnbroker.

19. 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).

20. | Culpeper Pawnbroker 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, Culpeper Pawnbroker 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

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‘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.

21. To preserve the deterrent effect of the civil money penalty, in any Related Consumer Action, Culpeper Pawnbroker may not argue that Culpeper Pawnbroker is entitled to, nor may Culpeper Pawnbroker 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, Culpeper Pawnbroker 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.

C. Default or Delinquency

22. ‘In the event of any default on Culpeper Pawnbroker’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.

23. Under 31 U.S.C. § 7701, Culpeper Pawnbroker 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.

D. Reporting Requirements 24. For five years from the Effective Date, Culpeper Pawnbroker must notify the

Bureau of any development that may affect compliance obligations arising under this Order,

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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 Culpeper Pawnbroker; or a change in Culpeper Pawnbroker’s name or address. Culpeper Pawnbroker must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner.

25. Within 21 days of the Effective Date, Culpeper Pawnbroker 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 Culpeper Pawnbroker

26. Within 90 days of the Effective Date, and again one year after the Effective Date, Culpeper Pawnbroker must submit to the Enforcement Director an accurate written complianceprogress report (Compliance Report), that, at a minimum:

a. describes in detail Culpeper Pawnbroker’s compliance with this Order; and b. attaches a copy of each Order Acknowledgment obtained under Section E of this Order, unless previously submitted to the Bureau. E. Order Distribution and Acknowledgement

27. Within seven days of the Effective Date, Culpeper Pawnbroker must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

28. Within 30 days of the Effective Date, Culpeper Pawnbroker must deliver a copy

of this Order to each of its board members and executive officers, as well as any persons with

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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.

29. For five years from the Effective Date, Culpeper Pawnbroker must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section D, 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.

30. Should Culpeper Pawnbroker seek to transfer or assign all or part of its operations that are subject to this Consent Order, Culpeper Pawnbroker 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.

31. | Culpeper Pawnbroker 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 E-Sign Act, 15 U.S.C. § 7001 ef seg., within 30 days of delivery of the Order, from all persons receiving a copy of this Order under this Section.

F. Recordkeeping

32. | Culpeper Pawnbroker must retain, for at least five years from the Effective Date, all documents and records necessary to demonstrate full compliance with each provision of this Order, including all consumer-credit contracts.

33. | Culpeper Pawnbroker must make the documents identified in paragraph 32

available to the Bureau within 30 days after a request.

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G. Notices to the Bureau

34. Unless otherwise directed in writing by the Bureau, Culpeper Pawnbroker 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. Culpeper Pawnbroker, File No. 2016-1680-02,” by email to [email protected], and contemporaneously to: Assistant Director for Enforcement Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552.

H. Cooperation with the Bureau

35. For five years from the Effective Date, Culpeper Pawnbroker must cooperate fully with the Bureau in this matter and in any investigation related to or associated with the conduct described in the Complaint. Culpeper Pawnbroker must provide truthful and complete information, evidence, and testimony. Culpeper Pawnbroker 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.

I. Compliance Monitoring

36. For five years from the Effective Date, for purposes of compliance monitoring,

the Bureau may communicate directly with Culpeper Pawnbroker, and Culpeper Pawnbroker

may, at its election, have counsel present during such communications and may consult with

counsel prior to responding to such communications.

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37. For five years from the Effective Date, Culpeper Pawnbroker must permit Bureau representatives to interview any employee or other person affiliated with Culpeper Pawnbroker who has agreed to such an interview. The person interviewed may have counsel present.

38. | 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.

39. The Bureau releases and discharges Defendant Culpeper Pawnbroker 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 Culpeper Pawnbroker or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or 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.

J. Retention of Jurisdiction

40. The Court shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.

IT IS SO ORDERED.

Dated this 27 May of Oct. _, 2017.

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

Veznn CMM

KARA K. MILLER (VSB No. 47821) Assistant Litigation Deputy

DONALD R. GORDON (D.C. Bar No. 4823 84) 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 Fimancial Protection Bureau

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FOR DEFENDANT:

Stuart Subke, Owner Tempo Venture, Inc., operating as Culpeper Pawnbroker

Il

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