CFPB Lawsuit Targets FirstCash for APR Military Cap Breach

The Consumer Financial Protection Bureau (CFPB) is proceeding with its lawsuit against FirstCash Inc. for allegedly violating the Military Lending Act (MLA) by charging military families pawn loan interest rates exceeding the 36% annual percentage rate (APR) cap. This case is among a small group of Biden-era enforcement actions retained under the CFPB’s current leadership. _{7, 8, 10}

Case Background

• Allegations: The CFPB alleges FirstCash and its subsidiary Cash America West issued over 3,600 pawn loans to active-duty servicemembers and their dependents with APRs "frequently exceeding 200%" between 2017 and 2021._{1, 2} The loans reportedly violated MLA requirements by:
  • Failing to disclose terms properly.
  • Including mandatory arbitration clauses.
  • Charging illegal fees. _{1, 3}
• Repeat Offender: FirstCash inherited a 2013 CFPB order against its predecessor, Cash America International, which prohibited MLA violations. The current case accuses FirstCash of breaching that order. _{1, 2}

Legal Context

• Military Lending Act Protections: The MLA caps interest rates at 36% MAPR (Military Annual Percentage Rate) for covered loans, including pawn loans, and bans forced arbitration clauses. _{3, 4}
• CFPB’s Authority: The CFPB gained MLA enforcement power in 2013, allowing it to seek injunctions, restitution, and penalties for violations. ₁