CARSON CITY — Nevada asked the state Supreme Court on Wednesday to reverse a District Court order that an auto title loan business did not use refinancing to bypass limits in state law.
At the root of the issue is the state’s consumer protection statutes that limit title loans to 210 days and prohibit a loan to exceed the fair market value of the vehicle.
TitleMax filed a complaint against the Nevada Department of Business and Industry’s Financial Institutions Division in 2019, and Clark County District Judge Jerry Wiese ruled in its favor. The state appealed Wiese’s decision.
“TitleMax, in this case, is like the teenager, insisting that the fiesta, soiree and get together that he hosted in his parents’ absence from home did not constitute the party that his parents prohibited,” argued Heidi Parry Stern, a solicitor general for the Nevada attorney general’s office.
TitleMax operates more than 1,000 offices in 16 states, offering high-interest loans to consumers with their vehicles as collateral.
Stern argued that after the 210-day limit, TitleMax offers customers a new loan to extend the time to repay and increase the interest that gets paid.
In some cases, customers end up paying 40 percent or more than what the car is worth, said Peter Aldous, an attorney with the Legal Aid Center of Southern Nevada, who has represented about 45 clients in these types of loans.
“They’re stuck in this cycle of owing money to TitleMax and not being able to pay it back,” Aldous said. “They’re so scared that their car is gonna get repossessed.”
TitleMax’s attorney, Dan Polsenberg, argued Wednesday that refinancing is different from extending a loan and is protected by the state statute. He also argued that his clients are not required to include interest in their loans.
“It wouldn’t be the same ability to walk away and avoid debt,” Polsenberg said.
This isn’t the first time the state and TitleMax have clashed in court.
In 2019, the state Supreme Court ruled that the auto title lender violated Nevada law with a loan program that overcharged customers with interest payments lasting twice as long as state law allows.
The decision partly reversed an earlier state District Court ruling, which itself tossed out an administrative law judge’s finding that voided more than 6,000 of the company’s loans and ordered refunds.
The Nevada Supreme Court is still deciding on the new case.