December 9, 2021
TILA (Truth in Lending Act) compliance remains important and is a top priority for the CFPB.
TILA regulates the disclosures you put on your pawn tickets.
Compliance with all disclosure requirements and calculations such as the “finance charges” and “Annual Percentage Rate” (“APR”) is very important.
TILA also regulates how you advertise the terms on which you offer pawn transactions. These are simple rules:
- If you advertise on radio, television, newspaper, flyer, or online that you make “5% pawns” or there is a “$5 carrying charge,” TILA requires that the advertisement of any finance-charge or interest-rate amount be accompanied by the Annual Percentage Rate.
- Also, in any print or visual ads, the disclosure of the APR must be in the same size of type or otherwise be as conspicuous as the finance charge or interest rate being advertised.
- If your advertising only mentions the APR, and no other specific or implied terms of your pawns, then no additional disclosures are required.
Be aware that your state’s attorney general is authorized – and even encouraged by the new CFPB Director — to investigate violations of consumer financial protection laws such as TILA.
So, if your state’s pawn regulator finds violations of TILA or of TILA’s advertising requirements, you could find yourself being sued for TILA violations by your state’s AG or by the CFPB.
That’s not good for your business and it’s not good for the reputation of the pawn industry in your state, with the CFPB, or in Congress. Please don’t cause harm for all pawnbrokers everywhere by playing fast and loose with your advertising.
You can read more about TILA advertising requirements in a January 2021 document published by the Federal Reserve Bank of Minneapolis here: https://consumercomplianceoutlook.org/2021/first-issue/understanding-regulation-zs-advertising-requirements/ .