AG Healey Secures Over $900,000 Including Debt Relief and Restitution for Consumers From Auto Title Lending Company

BOSTON — A motor vehicle title lender has agreed to provide over $900,000 in debt relief, restitution, and penalties to resolve allegations that it engaged in illegal auto lending practices, including making consumer loans with exorbitant interest rates, pursuing debts with excessive phone calls and emails, and threatening repossession of cars, all in violation of Massachusetts consumer protection laws, Attorney General Maura Healey announced today. 

The assurance of discontinuance, filed in Suffolk Superior Court, resolves allegations that the New Hampshire-based company NH Title Group, Inc. f/k/a Massachusetts Title Loan, Inc. and Capital Title Loan, allegedly charged

Massachusetts borrowers usurious interest rates for small dollar automobile title loans and engaged in unlawful debt collection and automobile repossession practices. NH Title Group, Inc. ceased doing business in Massachusetts and New Hampshire in 2019. 

“This company targeted financially strapped consumers and engaged in harmful tactics to collect on illegal loans, including repossessing cars,” said AG Healey. “We will continue to aggressively pursue companies that engage in illegal auto lending practices and hope that this sends a message that we will not tolerate lenders scamming our residents.” 

The AG’s Office began investigating NH Title Group, Inc. following several complaints from consumers. The investigation uncovered that the company issued approximately 2,745 automobile title loans to Massachusetts consumers which were less than $5,000 in principal and contained usurious interest rates of up to 300 percent. These exorbitant interest rates far exceeded the rate cap under Massachusetts’ Small Dollar Loan Statute, which applies to loans of $6,000 or less, and in addition to being illegal, rendered the title loans unaffordable for many consumers. More than 1,800 consumers defaulted and had their loans enter into collections, and hundreds of consumers ultimately lost their vehicles to repossession.  

The investigation also revealed that in the event of a borrower default, NH Title Group, Inc. would frequently pursue consumers through excessive telephone calls and emails to collect debts, in violation of the Attorney General’s Debt Collection Regulations. In addition, because the title loans already violated the state’s Small Dollar Loan statute and as such were considered void, any attempt to collect any debt from them is illegal.   

It was also discovered that in some instances, NH Title Group, Inc. failed to send consumers pre-repossession notices as required by state law. Such notices provide borrowers an opportunity to remedy their defaults, or otherwise catch up on missed payments within 21 days, in order to avoid repossession.  

Under the terms of the settlement, NH Title Group, Inc. will pay $500,000 in restitution and penalties and has forgiven over $400,000 in outstanding loan balances and post-repossession deficiency obligations. It has removed all liens on motor vehicles that served at its loans’ collateral. The company will also be permanently barred from engaging in any consumer lending, servicing or debt collection business in Massachusetts.  

The AG’s Office offers the following tips for people considering taking out a loan: 

• Be wary of any loan that originates solely online. Know your lender and where they are physically located. 
• Be skeptical of a promise of fast cash. These offers usually come with very high and illegal interest rates. 
• Know and understand what you are agreeing to, in writing, before you finalize any commitment. Always request and keep a copy of any agreement for your records. 

Payday and auto title lending are costly alternatives for short-term cash needs. Auto title lending puts your automobile – a significant asset – at risk. Before considering these types of loans, consumers should explore other alternatives including: 

• Contacting your local bank or credit union for a short-term loan; 
• Asking your employer for an advance on your paycheck; 
• Finding out if you can delay paying a non-interest bill such as a utility bill and make payment arrangements with the company; 
• Asking your creditor for more time to pay your bills or for a modification to your contract terms; 
• Contacting an accredited consumer credit counseling agency in your area such as Consumer Credit Counseling Service at (800) 388-2227 or American Consumer Credit Counseling at (800) 769-3571. The counselor can advise you how to get out of debt and avoid predatory loans 
• Obtaining a cash advance from a credit card; 
• Contact the Division of Banks to determine if a lender is licensed to do business in Massachusetts at their Consumer Hotline at 1-800-495-BANK (2265), ext. 501. 

AG Healey has previously taken action against illegal auto lending. In 2017, the AG’s Office obtained a judgment that voided hundreds of illegal loans owned by an online auto title lender. The AG’s Office continues to be active in this area and wants to hear from Massachusetts consumers who have information regarding unfair or deceptive lending. The AG’s Office encourages consumers who have concerns about illegal auto lending to call the office’s consumer hotline at 617-727-8400 or file a complaint online. 

This matter was handled by Division Chief Shennan Kavanagh, Assistant Attorney General Jane Sugarman, and Paralegal Andrew Turnball, of the AG’s Consumer Protection Division, with the assistance of Senior Investigator Edward Cherubin, of the AG’s Civil Investigations Division.