Attorney General Michelle Henry announced a multi-million dollar settlement with a national auto title lending company that preyed on Pennsylvanians with unlawful lending practices and interest rates — some exceeding 300 percent.

Community Loans of America, Inc., (CLA) which made thousands of unlawful loans to Pennsylvania borrowers, will pay $2.2 million in restitution to consumers, and, additionally, cancel $3.7 million in remaining debt, under the terms of the settlement.

“This predatory lender targeted Pennsylvanians, thinking it could skirt the law with astronomical interest rates because it was based out of state,” Attorney General Henry said. “My office has now obtained several million dollars for Pennsylvanians who were ripped off by out-of-state car title lenders. My message is clear: we do not care where you are located. If you exploit Pennsylvanians, you will answer for it.”

Title loans are high-cost installment loans that require the borrower to pledge a vehicle title as collateral. Since title loans are extremely expensive, consumers typically turn to title lenders when they are at their most vulnerable, such as like after losing a job or facing major medical expenses. Under Pennsylvania usury and racketeering laws, title loans are effectively prohibited because title lenders generally charge interest rates far above the Commonwealth’s 25 percent annual interest limit.

Some of CLA’s loans resulted from leads that CLA bought from third parties who claimed to have physical offices in Pennsylvania. The Office of Attorney General discovered these fake locations by running a web search for “Car Title Loan Philadelphia.” In fact, neither CLA nor its lead generators were in Pennsylvania. Most Pennsylvanians who obtained a loan from CLA drove to one of CLA’s Delaware locations. Nonetheless, Pennsylvania usury laws apply because CLA collected money from Pennsylvania consumers and repossessed vehicles in Pennsylvania.

This settlement comes on the heels of earlier settlements with other car title lenders — Auto Equity Loans of DE; Dominion Management of Delaware, which operated as CashPoint; and Approved Financial. Between the four recent cases, the Office of Attorney General has obtained more than $4.4 million in restitution and more than $8 million in debt cancellation for Pennsylvanians who were victimized by out-of-state car title lenders.

Consumers who believe they have been taken advantage of by a similar usurious car title lender should file a complaint or contact the Office of Attorney General at scams@attorneygeneral.gov or 1-800-441-2555.

The CLA settlement was filed in the Philadelphia Court of Common Pleas by Deputy Attorney General Jonathan Burns.