In 2016, TMX Finance paid a $9 million fine, approximately 1% of the company’s revenue that year, to the federal Consumer Financial Protection Bureau, which ruled that the company misled customers about the full costs of its loans in Georgia, Alabama and Tennessee. More than 30 states prohibit title lending or have laws inimical to the industry. Rather than seeing the company as a force for good, a growing consortium of lawmakers, religious leaders and consumer advocates believe TitleMax, and its industry writ large, to be predatory leeches on the growing ranks of working-class Americans. In 2019, TMX Finance reported $910 million in revenue, primarily from its TitleMax brand.
As the nation’s largest title lender, TitleMax thrives on an innovative business model that lends money to risky clients in exchange for collateral: the title to the vehicle in which the customers drove to the store.
TMX Finance, TitleMax’s parent company, calls itself a community resource to its 293,000 customers, people written off as credit risks by traditional lending institutions but who need financing to pay for life’s basic needs. Then the company told him something that nearly made him fall down: Even though he had paid more than $25,000 by then, his principal hadn’t budged. What the manager did not mention, Ball said, was that his payments would only cover interest.įor two years, Ball made his payments diligently, court records show. But the store manager explained that, as long as he paid $1,046 each month, he could extend the contract indefinitely and keep his car - on which he had no other debt - from being repossessed by the company.
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The terms of Ball’s contract were typical for TitleMax, specifying that he would have to repay the money plus interest in 30 days. In July 2017, Ball signed a contract to receive $9,518 from TitleMax in exchange for a lien on the title to his 2006 Honda Ridgeline truck, money that the couple used to pay for Gloria’s medical needs. “I was desperate” for quick cash, Ball said. Left with few options for raising cash, Robert Ball drove to TitleMax, a business that prospers in Georgia’s banking deserts and lends money at terms that would be illegal for other financial institutions. They faced huge medical bills, yet their bank refused to refinance their mortgage. That dream shattered when Ball’s wife, Gloria Ball, developed severe health problems. The couple had a comfortable house with a lush garden, the certainty of his pension and the hope of spending more time with their grandchildren. When Robert Ball turned 63, he was looking forward to retirement in his wife’s hometown of Savannah, Georgia. But poor regulation of a confusing system traps many borrowers in high-interest debt they can’t pay off. By Margaret Coker/The Current GA, Joel Jacobs/ProPublica, with research by Mollie Simon/ProPublica -įor some Georgia residents, title pawn contracts offer a quick way to obtain desperately needed cash.
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