https://portside.org/2023-01-21/sales-practices-nations-biggest-title-lender

In her mid-20s, Cordelius Brown thought she had found the perfect job. She was thriving as a store manager at TitleMax, a Savannah, Georgia-based company that dominates a segment of the state’s subprime lending industry known as title lending.

Brown’s easy rapport and hustle made her a natural in convincing Georgians with few credit options to sign up for TitleMax’s lending product. She was earning more than she ever had, thanks to bonuses she received based on a percentage of her store’s profits made from the company’s targeted consumers — people like her own family who were struggling to make ends meet in low-wage service industry jobs, living on a fixed income or out of work because of poor health.

For people written off as credit risks by traditional lending institutions, a “title pawn” from TitleMax can help finance urgent needs. The transaction is straightforward: The company lends money in exchange for collateral — the title to the vehicle in which the customer drove to the store.

But Brown’s customers continued to struggle, despite the financing from TitleMax. A key reason, she came to believe, was that the actual costs of borrowing were being masked by the sales techniques used by the company, which is exempt from Georgia’s usury laws and can lend money at terms that would be illegal for other subprime lenders.

“I carry a lot of guilt,” the 35-year-old said. “My community trusted me. What the company was selling to the community wasn’t good for them.”

Brown believes TitleMax distorts the true cost of borrowing to its tens of thousands of customers annually in Georgia. Credit: Malcolm Jackson for ProPublica

In 2016, the Consumer Financial Protection Bureau fined TMX Finance, the parent company of TitleMax, $9 million after the federal regulator determined that it violated federal laws with unfair, deceptive and abusive acts toward customers in Georgia, Alabama and Tennessee.

The CFPB also placed TMX Finance under a consent order to ensure the company’s compliance with the laws.

But Brown and two other former managers at TitleMax stores across south Georgia told The Current and ProPublica that, despite ongoing scrutiny by the federal regulator, the company continued similar sales techniques that distorted and hid the true costs of borrowing in Georgia until as recently as 2021.

Brown and another former store manager agreed to go on the record with their experience at five separate stores in Savannah and Columbus, Georgia. The third, who also worked in Savannah, requested anonymity out of fear of legal entanglements for speaking out against the company, which last year posted $735 million in revenue and is known in its key market of Georgia for its litigious nature.

The Current and ProPublica also reviewed internal TitleMax company documents, emails and text messages that corroborated the former store managers’ allegations.

TitleMax’s top executives have been clear publicly that the company’s business model depends on repeated monthly interest payments by its 293,000 customers nationwide. Brown, who worked as a store manager at TitleMax for almost seven years, and former Savannah store manager Ted Welsh Lupica both said that the company’s business model was drilled into them in training, and that they faced repercussions for telling customers how to pay off their debt quickly or in full.

Welsh Lupica, a military veteran, said his supervisors told him to stop being transparent with customers about the true costs of borrowing.

Still, Welsh Lupica kept providing this information to his customers. “I would be explicit. I would tell them, ‘Look, you make $2,000 a month and you want a $2,000 loan.’ I’d tell them, ‘Even if you pay us $200 a month, you are going to be doing that for the rest of your life because that’s not going to pay down the loan’” with the triple-digit interest rate, said Welsh Lupica, who worked with Brown for a few months at a store on Savannah’s east side.

The CFPB, which in December extended its consent order with TMX Finance through late January, declined to comment on the former store managers’ allegations.

Welsh Lupica quit TitleMax in September 2020 after he said he received a second oral reprimand for his transparent sales pitch and has pursued a different line of work.

Brown was fired in June 2021 for violating store policies, a move that came shortly after she had filed a complaint with the Equal Employment Opportunity Commission alleging racial discrimination by the company.

TMX Finance did not respond to requests for comment.

TitleMax, the nation’s largest title lender, boasts that it offers a rewarding workplace with plenty of upsides for employees who work hard. The company has a “passion for customer service coupled with a desire to create opportunity,” according to its website. “Fast-paced, dynamic, energetic — and just plain fun!”

In 2015, fresh from earning an associate degree in business, Brown liked what the company was promising. She had always been described as a natural salesperson. And she was familiar with TitleMax’s products: Her sister and some of her family’s acquaintances had taken title pawns.

When she was first hired in Columbus, Brown avidly consumed the company’s slickly produced training folder, paying close attention to TitleMax’s explanations of how employees could boost their monthly pay and get promoted. Employees would boost store profits — and receive a financial bonus — based on closing new accounts, the average size of title pawns and persuading customers to keep monthly interest payments coming in. Each of TitleMax’s more than 200 stores in Georgia tracks its own financials — which means, for store managers, “the more you sell, the more you make,” Brown said.

As an assistant store manager at the time, Brown was not aware that the system that sounded so good to her was running afoul of federal consumer protection laws.

The year after Brown was hired, in September 2016, the CFPB found that TitleMax’s businesses in three states had been violating multiple federal laws intended to protect Americans from predatory lenders or deceitful financial practices. In a 21-page consent order, the federal regulator described how the true costs of borrowing were hidden by TitleMax’s sales pitches and the company’s proprietary document known as a “voluntary payback guide,” which was given to customers to instruct them on ways to minimize their monthly payments without informing them that it could lengthen the time to pay off their debt. Those practices, the CFPB investigators concluded, “materially interfere with a consumer’s ability to understand that the longer the consumer takes to pay off the transaction, the more expensive the transaction will be, or to understand how much more expensive the transaction will be if paid off over a longer time.”

The result was that customers would owe their original debt to the company, even after making payments for many months or years — something that boosted profits for the company but was “unfair, deceptive or abusive” to customers, according to the CFPB.

TMX Finance did not admit to any wrongdoing but agreed to pay a $9 million fine.

Shortly afterward, in a lawsuit filed in the Magistrate Court of Dekalb County, Georgia, a retired Navy veteran made similar allegations that the voluntary payback guide he had signed at an Atlanta-area store was deceptive. (TitleMax successfully had the case transferred to federal court in Georgia.)

In court filings, TitleMax pushed back against the allegations. Its lawyers argued that the voluntary payback guide could not be construed as deceptive because it was not a legally binding document, and that the company followed federal Truth in Lending Act disclosures in its title pawn contracts. The judge cited these two arguments when he dismissed the lawsuit in the company’s favor in 2018.

Still, after TitleMax announced the CFPB’s order internally to its employees, Brown recalled that the voluntary payback guide disappeared from her TitleMax store. Sales techniques, however, didn’t change, she said.

By 2017, Brown had been promoted to store manager and had worked at two Columbus stores. She was being praised by superiors for increasing performance at the outlets, which served a primarily Black clientele. In 2019, she was promoted again and sent to a third store. Within months, her district supervisor and the regional vice president were applauding her work to store managers around the region, according to the emails reviewed by The Current and ProPublica.

Brown said her success came down to building trust with potential customers and her long hours hustling after payments from delinquent customers.

Brown and other store managers in Georgia were still boosting customer interest in the company’s title pawn contracts by emphasizing the monthly interest rate that TitleMax would charge, generally between 9.9% and 12.9%, according to a review of corporate documents and an analysis of contracts by The Current and ProPublica. In Georgia, however, because the contracts are structured to last only 30 days and customers are allowed to roll over the contract an unlimited amount of times, the true costs of borrowing remained opaque.

From July 2019 through June 2022, roughly 210 TMX Finance stores in Georgia under the brand names TitleMax and TitleBucks issued new title pawns for approximately 47,000 vehicles annually. They represented more than 60% of the state’s total volume of title pawns. In November, a review of more than two dozen Georgia title pawn contracts conducted by The Current and ProPublica found that annual interest rates in typical TitleMax contracts ranged from 119% to 179%.

Brown said she focused on collecting those repeat monthly payments in line with her corporate training and relished the role. She couldn’t recall ever talking to her hundreds of customers about an amortization schedule that would reduce their principal and finally get their account balance to zero. Her training made it clear that the company never expected her to do that, she said.

Yet Brown was deeply affected by a wave of customers telling her of their stress and worry when they couldn’t reduce their debt.

Robert Jones, an elderly Black man who lives on fixed income in Columbus, was one such customer. He used TitleMax multiple times when he was facing medical debts from his treatment for emphysema. In the more than two years of making monthly payments to the company, Jones said, he dealt with at least four different managers, and Brown was the only one who cautioned him about adding on to his debt load of $2,000 to pay for a new, expensive medicine with an additional title pawn. Brown “worked hard to help me understand which way was up” in what he saw as confusing contractual terms, Jones said.

Still, Jones eventually had to borrow more money from TitleMax because of his lingering medical debts, a move that compounded his struggles to get out of what he called his “debt trap” with the company.

In other cases, Brown decided to be even more proactive in helping customers find solutions to their debt problems.

In November 2019, Brown advised four longtime TitleMax customers, each of whom owed around $10,000, about securing an installment loan with a lower interest rate from another lender to pay off TitleMax. When they did, Brown’s Columbus-area district director noticed these lump-sum payoffs. He then chastised Brown for losing what had been high-paying repeat monthly accounts, according to a text message reviewed by The Current and ProPublica. The district director told her to “stay aggressive,” according to the text exchange.

“Our customers are decent, hardworking people. They aren’t bums,” Brown told The Current and ProPublica. “But to TitleMax, they just have one purpose: money.”

In February 2020, TitleMax asked Brown to move to Savannah and take over a struggling store there. She was nervous — the city was more than four hours away from her family — but she took the offer that she believed would bring her another promotion. She had dreams of being the first in her family to buy a home, and a career at TitleMax was a way to achieve that.

But Brown couldn’t square the idea of getting ahead personally with what she was starting to believe was an ambiguous business model. That understanding solidified that spring when a new assistant manager was assigned to her store.

Welsh Lupica was mustering out of the Air National Guard just as the global economy was shutting down because of the COVID-19 epidemic. He needed a job to help pay the bills, and TitleMax, which had been declared an essential business by Georgia Gov. Brian Kemp, was hiring as industries across the state remained shuttered.

Welsh Lupica went through his TitleMax training with a more jaundiced eye than Brown had. He recalled asking during his training whether TitleMax used predatory practices and whether TitleMax was among the title lenders that had actively lobbied against a push to cap interest rates in Nevada at 36% to protect consumers against high-interest subprime lenders.

“In the military, I got a lot of financial education. We were always targets for that kind of crap,” Welsh Lupica said, referring to predatory lenders. The Pentagon, alarmed by the national security risks posed by the number of service members struggling to pay off debt, worked to strengthen federal laws protecting them from high-interest financial instruments, including title loans. “I wanted to know, ethically, what I was signing up for.”

Welsh Lupica said he was assured that TitleMax worked within the law, and that the company was a community asset.

Welsh Lupica began to feel differently, however, soon after he went to work with Brown at the TitleMax store on Skidaway Road in east Savannah, a mile away from Georgia’s first historically Black university and surrounded by leafy neighborhoods where a mix of working-poor and professional Black families lived.

Welsh Lupica and Brown formed a quick attachment as she taught him, a white man, how to gain the trust of their majority Black customers. That included tutorials on how to talk to older Black people, to drop some of his ramrod military formality and to be more self-deprecating in the store.

Brown, meanwhile, said Welsh Lupica opened her eyes to how the sales techniques that TitleMax had taught them as standard business practices confused customers about the true costs of a title pawn. Welsh Lupica explained to her how the minimum monthly payments that the company told them to emphasize with customers would lead people into a debt trap. Those minimal monthly payments would never decrease the principal, he told her.

“Customers who come to us looking for $2,000 or even $200 are not the type of people who can pay back that money at the end of the month. I knew that my customers would be paying month after month after month, but I didn’t realize how impossible it was,” Brown said.

Venus Lockett, a single parent who lives near Atlanta, turned to TitleMax when she couldn’t get a traditional loan because of her low credit score. The Atlanta-area store she dealt with never offered a printed contract, she said, and it took multiple trips dealing with multiple managers to get a clear sense of her debt.

Lockett said she would definitely have thought twice about signing a title pawn contract had she received the type of transparent sale pitch that Brown and Welsh Lupica offered. “You walk into TitleMax because you are desperate for any help to keep your kids warm and fed. But even desperate people can hear, if they are told plainly, what a terrible deal” a title pawn is, Lockett said.

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In the spring of 2020, Brown decided to implement more transparency before customers signed their contract, something she saw as beneficial for them and the company. “We were there to make money for ourselves and TitleMax, and we could do that by building trust with the customer,” Brown said.

One such strategy was to print the sales contract — the only document that showed the annual interest rate — for customers before they signed it. Verbally, Brown and her team continued to talk about the monthly payments but described that as a fraction of the total annual cost of borrowing. They also clarified with customers that the minimum payment due each month would only cover interest, and that larger monthly payments would be necessary to get rid of the principal. “I would tell them, ‘I don’t care if you only have an extra dollar or $5, you need to give that to me as well,’” Brown recalled. “‘Otherwise, I’m going to see you in here month after month until the day you die.’”

The standard TitleMax procedure is to simply show customers contracts on a digital screen, not in a physical copy, according to the three former store managers. The only time a customer sees the annual interest rate is on the final contract, they said.

The third former store manager, who worked at two other TitleMax locations in south Georgia, confirmed that the sales techniques adopted by Brown and Welsh Lupica were not part of TitleMax’s standard routine. “We were trained to keep customers paying [their monthly interest], not how to tell the customer how to pay off the loan,” the former store manager said.

By late spring, however, the company got wind of the transparent sales pitch that Brown and Welsh Lupica had adopted — and communicated its disapproval, they said. Brown said her relationship with the company deteriorated, as she became emboldened to speak up against what she saw as workplace problems and to advocate for customers struggling to pay their title pawns.

Welsh Lupica, meanwhile, was transferred in June 2020 out of Brown’s store. He was sent to TitleMax’s flagship store in Savannah, which serviced over a million dollars in customer accounts each year. He didn’t adhere to the hard-nosed sales techniques that were routinely employed there, such as trying to get customers to agree to a higher amount of financing than they said they needed.

Instead, Welsh Lupica tried to continue the practice he had adopted at Brown’s store. But he said he was reprimanded and told to stop, especially his habit of printing the sales contracts for customers.

Feeling uneasy about the business practices, Welsh Lupica resigned in September 2020. “Most people who come to us are financially challenged,” said Welsh Lupica, who is now a Chatham County firefighter. “They rely on trust with the store manager.”

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As 2020 continued, Brown became increasingly disillusioned with her work, especially with how the company dealt with Black employees and customers.

The pandemic was ravaging Georgia’s Black community — yet TitleMax did not pay for COVID-19 tests for employees in south Georgia, according to the three former store managers. Brown also complained to human resources and her district director that she had to work a full month without a day off or lunch breaks, while white managers in nearby stores were granted those basic rights, according to a civil rights discrimination lawsuit she later filed against the company, as well as the emails and text messages reviewed by The Current and ProPublica. Welsh Lupica confirmed Brown’s predicament. “Black employees were treated differently. I saw it happen,” he said.

The company also ignored pleas from Brown to try to evict a group of suspected drug users who slept in her store’s parking lot and made her and other employees feel unsafe, according to Brown’s lawsuit, as well as the reviewed company communications.

In October 2020, Brown was physically attacked as she was closing her store for the night, according to medical records and company communications. She took a leave of absence and returned to work in February 2021 because she needed a paycheck.

Brown said she resumed her practice of transparently explaining the true costs of borrowing to her customers. But she hit a wall a couple of months later when an elderly Black woman came into her store. Brown remembered watching the woman struggle painfully to walk from the parking lot to discuss her overdue account. The woman had had a stroke, she explained, and TitleMax had repossessed her car while she was in the hospital. Brown fought successfully with the company to have it pay $200 for a towing company to return the customer’s car. Yet what Brown saw as a decision affecting her customer’s life, the company seemed to view it as a mere accounting issue, according to company communications reviewed by The Current and ProPublica.

For Brown, that was the last straw. She filed a workplace grievance with the EEOC, alleging racial discrimination by TitleMax. In her claim, Brown listed multiple occurrences of what she described as unequal treatment she received as a Black woman compared with white colleagues, including being passed over for a promotion, unequal enforcement of the rules for breaks and vacation, and the use of racially insensitive language by her superiors.

In June 2021, TitleMax fired her, citing multiple violations of protocol, including once mistakenly repossessing a wrong vehicle.

Seven months later, the EEOC closed Brown’s complaint, declining to rule either for Brown or for the company. “The EEOC makes no finding as to the merits of any other issues that might be construed as having been raised by this charge,” the final report said. Employment and labor lawyers in Georgia say the EEOC rarely pursues the thousands of complaints it receives each year, leaving aggrieved workers in limbo about their allegations of discrimination. The EEOC declined to comment on the case, citing confidentiality.

At least two other former TitleMax employees in Georgia have sued the company in the last 10 years alleging racial discrimination or sexual harassment after filing EEOC complaints. One case was settled, but its terms are unknown. The other was dismissed before the discovery phase. The company’s employment contract had a mandatory arbitration clause — a closed-door dispute mechanism that companies often use to prevent workplace allegations or criticisms from becoming public. The EEOC declined to provide the total number of complaints filed against TitleMax, citing privacy laws.

In April, Brown filed her lawsuit against the company in the federal district court for the Southern District of Georgia, hoping that the courts would take her complaints more seriously. TitleMax never replied to the substance of Brown's allegations and instead argued for the case to be thrown out on procedural grounds. This month, the judge dismissed the case, which Brown filed on her own and without legal counsel, for technical reasons, faulting her for not presenting the legal complaints in a professional or appropriate manner. He did not rule on the merits of the case.

Brown also emailed a letter to the CFPB, citing her allegations of racial discrimination and TitleMax’s business practices as potential violations of federal law. But she did not use the dedicated email portal or phone number that the CFPB spokesperson said the agency encourages whistleblowers to use, and she has not heard back from the federal regulator. The CFPB declined to comment on Brown’s allegations, citing the ongoing consent order with TitleMax.

Brown now works for another Savannah-based company that sells furniture to elderly residents with mobility issues. She makes less money but feels better about work at the end of the day. At least one former TitleMax manager also works at the business, and they often swap stories about their shared experience.

“You can make money and be honest with your customers,” Brown said. “That’s the bottom line. In seven years at TitleMax, I didn’t see a single supervisor who understood that and wanted to do business in that way.”