Wisconsin Auto Title Loan Settlement Pays Consumers $1.8 Million
Around 19,000 customers from Wisconsin Auto Title Loans Inc. received checks to compensate them for being tricked or forced to pay for insurance-like memberships on top of their high-interest short-term loans.
Wisconsin Auto Title Loans paid a total of approximately $1.8 million to $1.9 million to consumers in a settlement announced in September between the company, the Wisconsin Department of Justice and the Milwaukee Legal Aid Society, Legal Aid attorney Peter Koneazny told the public investigator. Wisconsin Auto Title Loans is based in Green Bay and has 22 locations in Wisconsin.
The total settlement of $2.75 million lasted about a decade, as the company denied doing anything wrong. The settlement involves deceptive practices from January 1, 1999 to December 31, 2010.
Consumers who took out auto title loans paid annual interest rates in excess of 300% in exchange for short-term loans made as a lien on their auto titles. Further, the state and the Legal Aid Society argued that Wisconsin Auto Title Loans tricked its customers into paying membership fees to its Continental Car Club, or forced them into membership as a condition of obtaining the loan.
Fees ranged from $30 to $150, depending on the amount of the loan taken out. The “car club” service reimbursed members a small amount for services, such as $50 for towing, in the event of an emergency.
As part of the settlement, eligible consumers were reimbursed 125% of the membership fee. As part of the settlement, Wisconsin Auto Title Loans also agreed to extinguish all finance charges and fees accrued on its approximately 36,000 accounts.
Checks averaging $100 to $200 were issued in late March and some were reissued in late June, Koneazny said. Everyone eligible for payment should have received checks in the mail.
Koneazny said some 35 to 40 customers contacted him about missing checks, thinking they were eligible. It turned out that they weren’t.
However, 35 other consumers appear to be entitled to compensation but have not received a check. Wisconsin Auto Title Loans is now investigating whether some customers were mistakenly excluded from settlement payments.
To qualify for settlement funds, consumers had to meet three conditions:
■ Have had a loan with Wisconsin Auto Title Loans between January 1, 1999 and December 31, 2010, as well as a membership in the Continental Car Club. (The high-interest loans themselves were not the subject of the dispute, only the insurance-like membership.)
■ Have repaid an amount equal to or greater than the money the customer received from Wisconsin Auto Title Loans (excluding interest). Consumers are also eligible if their car was repossessed and sold for an amount equal to or greater than the money they received from the loan.
■ Have returned by post the card informing him of the settlement no later than March 1st.
Customers who did not meet all of these conditions were not eligible, Koneazny said. But some consumers seem to have met the conditions and did not receive a check.
Several consumers also contacted the public investigator after the original Wisconsin Auto Title Loan Settlement website was shut down to find out when their checks were coming in or to ask why they hadn’t received payment yet.
“We’ve had people tell us – and we think this may be correct – that they actually paid up to that minimum amount and even paid off their loan and somehow were listed as ineligible,” Koneazny said. “We asked the company to investigate. We sent them samples to determine if there was an error on their part.”
Wisconsin Auto Title Loans customers who have questions or who believe they have been unfairly excluded from the settlement can call Koneazny at the Legal Aid Society at (414) 727-5333 or email him at [email protected]
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