New Jersey Court Revisits Lawsuit Against Title Loan Company

Inside Subprime: Oct 19, 2018

By Ben Moore

A New Jersey court is potentially bringing back a class action lawsuit against a title loan company for charging exorbitantly high interest fees.

The case goes back to New Jersey resident Marjorie Moore, who is suing a Delaware-based title loan provider. Moore’s suit against the loan provider and its owner, claims her $3,000 loan has interest over New Jersey’s 30 percent legal limit.

An appeals court decided to overrule a lower court’s decision that Delaware law should apply in this lawsuit, not New Jersey law, and to allow new evidence to be heard in the case.

In the early October decision, the appeals court did acknowledge that the New Jersey connections might be overstated, but that the two-judge panel wanted to hear more information in the lawsuit. Payday loans are legal in Delaware under the Small Loan Act or Licensing Law, and there are no limits on APRs that lenders can charge. In New Jersey, payday loans are illegal and there is a 30 percent APR cap.

Moore took out the title loan in December 2013 and received $3,000 with her 2007 Toyota Camry as collateral, according to court documents. The APR was set at just over 180 percent, so Moore was required to pay back $3,543. Moore, who lived in Hillsborough, New Jersey, was approved over the phone and told to sign and pick up the auto loan paperwork in Delaware. According to the lower court decision, the contract detailed that Delaware law applied, not New Jersey law.

According to documents, the loan was due a month after the paperwork was signed. Moore ending up making two payments just under $1,000 before her car was repossessed in January 2015 in New Jersey.

A court decision said the title loan provider mailed Moore a notice of charges, including the $3,085 balance, interest of more than $5,000, repossession fees of $575 and an ongoing storage fee of $25 a day.

Moore sued the company in December 2015 over the charges; after the first suit was thrown out and then successfully appealed, she filed a class-action lawsuit, citing New Jersey laws like the decades-old Consumer Fraud Act.

The class-action lawsuit would apply to other people from New Jersey who had title loan contracts with Capital Title. Court documents from 2017 show Moore was seeking $100 in damages from the loan provider.

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