CFPB Reaches Settlement with FirstCash, Inc. and Its Subsidiaries for Military Lending Act Violations

This settlement serves as a major warning for any business offering credit to consumers. The CFPB targeted FirstCash for violating the Military Lending Act (MLA) by charging interest rates above 36% to active-duty service members and their families. While your business might not be a pawn shop, the enforcement actions highlight a critical compliance trap: checking military status. FirstCash failed to identify covered borrowers correctly, leading to illegal loan terms. If you offer any form of in-house financing, installment plans, or lease-to-own options, you must have a foolproof system to cross-reference customers against the Department of Defense database. Failure to do so can result in massive fines and even force you to void your contracts. This case proves the CFPB is actively looking for high-interest loopholes and will look back years into your records to find violations. The settlement includes both a permanent injunction against further violations and significant financial penalties. For a retailer, the takeaway is clear: your financing software or lender partners must be 100% compliant with MLA disclosures and interest rate caps, or you risk losing your ability to offer credit entirely.

Source: CFPB Newsroom

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