[co-author: Stephanie Kozol]

Indiana Attorney General Todd Rokita and the Indiana Department of Financial Institutions announced a settlement in excess of $250,000 with Integrity Acceptance Corp., affiliated companies, and their owners to resolve allegations that they originated personal loans without the required license, contracted for charges in excess of the maximum allowable rate, misrepresented finance charges, and failed to disclose prepaid finance charges in violation of the Indiana Uniform Consumer Credit Code and Indiana Deceptive Consumer Sales Act. As part of the settlement, the entities will forgive $223,685 in loans, pay $33,991 in restitution, and pay $33,000 in civil penalties and costs to the state. The entities and their owners are also enjoined from engaging in similar conduct in the future.

According to the press release, Integrity Acceptance Corp. and its related entities provided personal loans to consumers to finance taxes and down payments associated with vehicle purchases.

Our Take:

There are two things to note here. First, Indiana chose to pursue the entities under Indiana law rather than asserting violations of potentially applicable federal statutes like the Consumer Financial Protection Act or the Truth in Lending Act. This settlement is yet another example of an activity that the State Attorneys Generals across the United States view as germane to their mandate to protect consumers, especially from perceived unfair or unlawful consumer lending practices. Second, unlike many cases currently in the news, these allegations do not involve retail installment sales contracts. It is a reminder in particular to non-bank finance companies that make direct loans to finance vehicle purchases that they need to carefully consider the related licensing implications of their relevant financial services offerings.