Title-pawn legislation hits bumpy road

Lawmakers in both chambers of the Georgia legislature have introduced bills focused on the homegrown billion-dollar title loan industry, financial companies whose products are deemed predatory in 30 states but have found a lucrative niche in the Peach State.

Crossover Day is closing in, however, and prospects are fading for any meaningful reforms for the businesses that traps tens of thousands of consumers into debt and the controversial business practices by industry leader TitleMax revealed by The Current in partnership with ProPublica.

In 2023, our reporters revealed for the first time the scope and scale of this controversial industry thanks to whistleblowers who managed Coastal Georgia TitleMax stores and our massive investigation of public documents.

The reporting revealed that more than 70,000 Georgia consumers, largely the working poor or vulnerable retirees who struggle to pay monthly bills, take out these loans annually. State law allows title lenders to charge upwards of 187% annually, a rate illegal for all other financial services, and whistleblowers from TitleMax told us that consumers are often misled about the costs of these loans due to deceitful sales practices. (TitleMax controls more than 70% of the business in the state, according to our reporting.)

During our year of reporting exclusives, federal regulators fined the Savannah company $15 million for violating laws intended to protect military families from predatory lending. That was the second time in a decade that TitleMax was fined by the Consumer Federal Protection Agency — an action that caught state legislators’ attention.

That momentum brought new attempts to reform the industry in this legislative session. Last Thursday, a Senate bill — which had the approval of influential industry leaders and drew controversy by conservative state Republican leaders for not going far enough to protect vulnerable Georgians — failed to gain traction in committee. Georgia Watch, the consumer group that has been lobbying for reforms did not support the bill, which would have brought some state regulation over the industry but would not change the loophole that allows it to charge 187% annual interest rates.

According to a statewide poll conducted by the University of Georgia in 2023, 71% of Georgians believe that the state should regulate car title lenders. Most Georgians also support a 61% rate cap on car title loans, a rate that matches the state’s usury law.

Meanwhile, House Bill 342, sponsored by Rep. Josh Bonner, a Republican from Fayetteville, promises to rein in excesses that put consumers in a debt trap. However, his bill has not yet been scheduled for a vote in the House Committee on Banks and Banking. With less than a week left until Crossover Day, that dampens chances for statewide action again this year.

The Tide brings informatin and observations from The Current’s staff.