MCDANIEL SUES LONOKE COUNTY PAWNBROKER
LITTLE ROCK – Attorney General Dustin McDaniel filed a consumer-protection lawsuit today against a Lonoke County pawnbroker accused of marketing illegal auto title loans with interest rates of more than 300 percent to dozens of Arkansas consumers.
Toby R. Troutman, owner of TRT Investments Inc., is the defendant in the lawsuit alleging violations of the Arkansas Deceptive Trade Practices Act. Troutman and TRT Investments operate US Pawn and Loan in Austin.
According to the lawsuit, US Pawn and Loan offered auto-title loans, also known as title pawns, to Arkansas consumers. Title pawns are short-term, high-interest loans in which the borrower provides the lender with the title and a key to his or her vehicle as collateral. In a title pawn, the borrower retains the vehicle but the lender keeps the right to seize or sell the vehicle if the borrower fails to meet payment obligations.
US Pawn and Loan is accused of engaging in at least 86 title-loan transactions with at least 63 Arkansas consumers. The effective interest rate for each of the loans exceeded 300 percent. For example, the business charged $375 a month in interest and fees on a $1,500 loan, with the monthly rate being assessed every month the loan was outstanding.
“No matter whether it’s a high-interest title loan or a payday loan, these types of lending activities are bad for consumers and illegal in Arkansas,” McDaniel said. “I have made it a priority in my office to protect Arkansans against usurious lending practices.”
McDaniel’s lawsuit claims that Troutman attempted to disguise the nature of the title loans as the sale of the borrower’s vehicle with the simultaneous sale or lease of the same car back to the consumer. US Pawn and Loan used terms like “sales/leaseback loan” on its website.
McDaniel filed the lawsuit in Pulaski County Circuit Court.
The Attorney General asked that US Pawn and Loan be required to cancel consumers’ debt obligations, return vehicle titles to their appropriate owners and pay restitution, civil penalties, attorneys’ fees and costs.