FirstCash, a national pawnshop chain, is asking a federal judge to confirm that it has a statutory defense to all of the CFPB’s claims that it violated the Military Lending Act (MLA) while also asking the judge to drop three of the CFPB’s MLA claims for lack of jurisdiction—contending that the bureau has conceded that it does not have the authority to enforce those claims..

The chain recently filed a motion for partial summary judgment in U.S. District Court for the Northern District of Texas.  In that motion, the company first argued that under the MLA it is entitled to assert a bona fide error defense to all MLA claims, even if the CFPB is the plaintiff, because the provision of the MLA that authorizes the bona fide error defense makes no distinction between claims brought by private parties and claims brought by the government. 

The company then argued that three of the CFPB’s MLA claims should be dismissed for lack of subject matter jurisdiction because the bureau admitted that those claims were not brought under the MLA but were instead brought under the Consumer Financial Protection Act, which only authorizes the CFPB to bring, and the court to have jurisdiction over, actions for violations of “Federal consumer financial law” – a defined term that does not include the MLA.

In its complaint, filed on November 12, 2021, the CFPB said that FirstCash and its subsidiary, CashAmerica West, made more than 3,600 pawn loans to more than 1,000 covered borrowers from stores in Arizona, Washington, Utah, and Nevada with annual percentage rates over 36%; frequently the interest rate exceeded 200%.

In November 2013, the CFPB reported that it had found evidence that Cash America International Inc. — a predecessor to FirstCash — and a Chicago-based subsidiary issued hundreds of payday loans to service members with illegally high interest rates. CashAmerica agreed to refund customers more than $14 million, pay a $5 million fine and stop alleged misconduct against military families. As part of the consent order, the company agreed to improve compliance with the Military Lending Act.

The CFPB now is accusing the company of disregarding that consent order.

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