[co-author: Amanda Yap]*
On July 11, 2025, the Consumer Financial Protection Bureau (CFPB) announced a proposed $9 million settlement resolving its November 2021 lawsuit against a national pawn lender and its subsidiaries. The company and its subsidiaries operated more than 1,000 retail pawnshops across the United States and offer short-term, collateralized loans through a network of wholly owned subsidiaries.
The CFPB alleges the companies violated the Military Lending Act (MLA) by:
- Issuing loans exceeding the MLA interest cap. The Bureau alleges the companies made pawn loans to active-duty servicemembers and dependents with annual percentage rates above the MLA’s 36% limit.
- Implementing prohibited arbitration terms. Loan agreements allegedly included mandatory arbitration provisions, in violation of the MLA’s prohibition against such terms.
- Failing to provide required disclosures. The companies purportedly did not deliver key MLA-required written disclosures at the time of the loan transaction.
- Violating the Bureau’s prior order. The Bureau further alleges the conduct breached a 2013 consent order issued against a related entity.
If approved by the court, the settlement would require the companies to pay $5 million in consumer redress and a $4 million civil money penalty to the CFPB’s victims relief fund. The companies would also be mandated to offer a loan product to servicemembers and their dependents that is MLA-compliant or implement a screen for MLA-protected borrowers before issuing loans.
*Amanda Yap is a summer associate in the Orange County office.
Putting It Into Practice: This settlement highlights the CFPB’s continued enforcement of the Military Lending Act and its focus on lenders that provide high-cost credit to servicemembers (previously discussed here and here). Pawn lenders and other small-dollar creditors should ensure their loan products meet all MLA requirements, including interest rate limits, disclosure obligations, and restrictions on arbitration clauses.
