Despite saying they have no legal basis to do so, Virginia state officials have denied the Center for Public Integrity immediate access to annual corporate reports filed with the state by the nation’s three major auto-title lenders.
The title-loan companies TitleMax of Virginia; Anderson Financial Services LLC, doing business as LoanMax; and Fast Auto Loans Inc. argue that releasing the reports would seriously damage their businesses.
In November, the Center for Public Integrity sought copies of the 2014 annual reports the three lenders filed with the Virginia Bureau of Financial Institutions. In addition to revenues, the lenders must report data such as the number of title loans and their terms, the number of defaults and how often they sue customers or repossess their cars. The companies also must disclose if they have been the subject of any “regulatory investigation” for misconduct anywhere in the country within the past three years.
In a filing made public on Monday, state officials, in reaction to petitions filed by the three loan companies that argued the information should not be made public, said they were “not persuaded” by objections from the title companies. Officials also said they “were unaware of any statutory or other legal basis preventing the reports from being treated as public records.”
Still, the officials recommended that the issue be taken up as part of the rule-making process, which would give all parties time to make their case. In the meantime, they recommended that the records remain confidential.
Jay Speer, executive director of the Virginia Poverty Law Center, said state officials were “perhaps being overly cautious” in withholding the records. “Why would it be bad for the public to know they [title lenders] are being fined in other states?” he said.
The title loan industry, which is dominated by three Georgia-based companies, has come under fire from consumer advocates and some lawmakers for charging interest rates that can exceed 300 percent in some states and seizing the cars of borrowers who fail to repay their loans.
A Center for Public Integrity investigation found that the title lenders have fended off tighter state oversight of their operations behind millions of dollars in campaign contributions, aggressive challenges to regulators who seek to rein them in and by writing loan contracts that leave aggrieved borrowers with little legal recourse.
Title loans are legal in about half the states, and the three major companies operate more than 3,000 stores, including more than 200 in Virginia.
Virginia officials said nobody had asked for the reports before the Center for Public Integrity filed its request. Officials told the Center they could find no reason not to disclose them under the state’s public records law.
Virginia Commissioner of Financial Institutions E.J. Face Jr. wrote in Nov. 19 letters to the companies that his office was “unable to identify a statutory or other legal basis” for keeping the records secret.
But Face gave the lenders a chance to challenge his decision, and all three promptly did.
Making the data public “could endanger the safety and soundness of Fast Auto,” that company wrote in a Nov. 30 legal brief.
TitleMax argued it would suffer “irreparable damage” as a result. The company said anyone “could, at a glance, identify the strengths and weaknesses of TitleMax’s products and their financial risks.”
LoanMax wrote that it would be at a “competitive disadvantage” because competitors could see states “in which LoanMax is at increased risk for regulatory scrutiny due to past regulatory actions.”
Loan Max asked that its report be kept confidential “until there is a hearing on this matter and all other remedies, including an appeal to the Supreme Court of Virginia, have been exhausted.”
Ken Schraud, spokesman for the state financial institutions agency, said the commission “will weigh the legal arguments presented and rule accordingly by further order.”