Authorities in Virginia Give Auto Title Lenders Chance to Keep Information Secret – They Take It – Center for Public Integrity



A screenshot of TitleMax’s annual reports.

The nation’s top three auto title lenders are pressuring Virginia officials to keep a wide range of their business records under wraps, including details of how often they have problems with regulators and how many. cars that they take back from buyers who cannot repay their loans.

The offer of secrecy is clear from the heavily drafted annual reports that lenders filed with officials in Virginia on Thursday. The written reports were submitted to the state as part of a public records dispute between the Center for Public Integrity and TitleMax of Virginia Inc .; Anderson Financial Services LLC, doing business as LoanMax; and Fast Auto Loans Inc.

Securities loans are controversial because of the punitive interest rates they can charge borrowers. In 2014, the average title loan in Virginia was $ 1,048 and it took almost a year to pay off at an annual interest rate of 222%, according to state aggregate data of all lenders. of titles.

The public records dispute arose in November when the Center requested copies of the 2014 annual reports, which include more detailed and individual data on their operations, from securities lenders filed with the Virginia Bureau of Financial Institutions.

Annual reports include sales and revenue figures, the volume of loans made and their terms, as well as sensitive information such as how often lenders repossess cars when buyers don’t pay them. Companies must also disclose if they have been investigated or cited by regulators in other states or at the federal level. The annual reports do not contain the names of borrowers or their financial status.

Officials in Virginia said no one had requested the annual reports before the Center made its request and could not find any legal basis for not publishing them. But state officials have given securities lending companies the opportunity to submit drafted copies of their annual reports and cite a legal basis for withholding part of the reports.

In its report filed Thursday, Fast Auto Loans revealed that it operates 69 stores in Virginia, but little more. The company has withheld details such as the number of loans it makes and the interest rates it charges, the default rate and the number of cars it is repossessing. This is “proprietary and financial information” and making it public would be “detrimental” to the business, Fast Auto wrote.

Fast Auto answered “yes” to a question on the report form that asked whether the company or its officers had been “subject to a regulatory investigation” by a state or federal agency in the past three years. But he withheld details, arguing that “This information is protected from disclosure as confidential due to the ongoing nature of the investigations.”

While Fast Auto revealed the names of some senior executives, including President and CEO Robert I. Reich, it erased ownership details.

TitleMax of Virginia has also revealed little beyond the name of CEO Tracy Young and that it operates 96 stores in the Commonwealth. The company argued that it wanted to protect the “trade secrets” of its competitors.

“This would allow competitors to identify the strengths and weaknesses of TitleMax’s products and their financial risks, which would cause TitleMax substantial competitive harm,” the report said.

Anderson Financial / dba LoanMax did not name the company’s executives, although it did provide the address of its headquarters in Alpharetta, Ga., And that it had 73 stores in Virginia.

LoanMax noted that it had reported regulatory action to the commission “on the assumption that the annual report would not be made public.”

“Disclosure of the information in question to the public could deter lenders of motor vehicle securities from disclosing information to the commission,” according to the report.

The commission will hold a hearing and take testimony on the dispute on January 22 in Richmond.

Whether the records are public is not entirely clear as the State Corporation Commission operates outside Virginia’s open records laws.

That should change, said Megan Rhyne, executive director of the Virginia Coalition for Open Government.

Rhyne said the commission “regulates so many companies that have a direct impact on the public, but there is much less opportunity to view regulatory records … than the records of any other government agency or department.”

Some Virginia lawmakers target the high interest rates charged by securities lenders. This week, Governor Terry McAuliffe, a Democrat, expressed support for a bill to cap rates at 36% per year. This is the limit on loans granted to the military.

Yet efforts to limit interest charges have repeatedly failed in many states, including Virginia. A Center for Public Integrity investigation in December found that about 150 bills to lower interest rates or curb abusive lending tactics have died in 20 state legislatures over the past five years. Lenders often won the day, arguing that ceiling rates would force them to close their doors.

Executives of the securities lending companies could not be contacted or declined to comment on the Centre’s findings.

Critics accuse the major securities lenders of lining their support in state houses with hefty political contributions, including more than half a million dollars in Virginia over the past decade.

In 2015, Virginia General Assembly bills to cap interest rates, restrict the number of loaner stores in some jurisdictions, and keep stores at least 10 miles from military bases did not. all not successful.


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