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COMMONWEALTH of VIRGINIA
Office of the Attorney General

Robert F. McDonnell
Attorney General  
900 East Main Street
Richmond, VA  23219
804-786-2071
804-371-8947 TDD

 

 
 

For Release: Aug. 22, 2007
Contact: J. Tucker Martin or David Clementson
Email: tucker.martin@oag.state.va.us or dclementson@oag.state.va.us
Phone: 804-786-2071

McDonnell Announces Settlement with Auto Title Lenders

Rosemont Auto Title Loans, Oceana Auto Title Loans Agree to Make Refunds to Eligible Consumers

Richmond – Attorney General Bob McDonnell has reached a settlement with Rosemont Auto Title Loans and Oceana Auto Title Loans, two title lenders operating out of Virginia Beach, for violations of Virginia’s Consumer Finance Act. 

Rosemont and Oceana generally make personal loans to consumers which are secured by a motor vehicle title. 

“I am pleased we were able to reach a fair and reasonable agreement with Rosemont Auto Title Loans and Oceana Auto Title Loans that will provide refunds and other relief to affected Virginians,” McDonnell said. “We appreciate their cooperation with us throughout our investigation.”        

The alleged violations occurred during the period from December 2004 through May 2007. During this time, Rosemont and Oceana charged borrowers interest rates that exceeded statutory limits. The Consumer Finance Act generally prohibits unlicensed lenders from charging and receiving interest in excess of 12 percent per year on consumer loans.

One exemption allows a lender generally to offer open-end credit and charge finance charges and other fees at any agreed upon rate, as long as the lender provides the borrower with a minimum 25-day grace period to repay the loan in full before incurring a finance charge. The Attorney General contends that Rosemont presented its title loans as a form of open-end credit, but did not provide the required “finance charge” grace period. Rosemont’s failure to comply with the requirements for open-end credit made its loans subject to the Consumer Finance Act, which it violated by charging interest in excess of 12 percent annually.  

The settlement includes the following key terms relating to future loans and title loans made by Oceana and Rosemont during the period in question:

  • A permanent injunction preventing Rosemont and Oceana from violating the Consumer Finance Act in the future by charging and receiving interest in excess of 12 percent on consumer loans, unless Rosemont and Oceana are otherwise exempt by statute;
  • Rosemont and Oceana agree to make refunds totaling $21,459.91 to 99 borrowers for finance charges paid on loans paid in full during the first two billing cycles. Rosemont and Oceana will issue Claim and Release forms to all consumers who are eligible for refund checks;  
  • Rosemont and Oceana agree not to collect deficiency amounts totaling approximately $18,041.16 owed by 13 borrowers who obtained loans, later defaulted on those loans, and whose vehicles were repossessed;
  • Rosemont and Oceana agree not to collect approximately $22,564.28 in interest owed by 21 borrowers who obtained loans, later defaulted on those loans, and whose vehicles were not repossessed;
  • Rosemont and Oceana agree to pay $15,000 for reimbursement of the Commonwealth’s attorney’s fees.

Consumers who have questions about the settlement may contact Rosemont or Oceana directly. Consumers with inquiries regarding loans from the Rosemont store may call (757) 306-4990, while those with inquiries regarding loans from the Oceana store may call (757) 425-1320. Under the settlement, Rosemont and Oceana must accept settlement-related collect calls from consumers residing outside of the local calling area.

The civil settlement is in the form of a Consent Judgment that was filed yesterday with the Richmond Circuit Court for approval.