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Settlement checks to be issued to 23,000 auto title loan customers

2014-01-13 13:20:07

Checks are expected to be issued in mid-February to about 23,000 Wisconsin Auto Title Loans Inc. customers who were forced — or tricked — into paying for insurance-like club memberships in addition to high interest rates on short-term loans.

The payments are part of a $2.75 million settlement, announced in September between the Wisconsin Department of Justice, Legal Aid Society of Milwaukee and Wisconsin Auto Title Loans that was a decade in the making.

About 90,000 consumers, mostly from Wisconsin, received notices in the mail in the fall stating they might be eligible for a cash payment to reimburse them for memberships in the Continental Car Club, an insurance-like service that Wisconsin Auto Title Loans sold alongside the loan.

The membership functioned like a type of insurance that would compensate the member a

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small amount for emergency services, such as towing.

It was marked as optional, but prosecutors said Wisconsin Auto Title Loans' salespeople sometimes claimed the membership was a one-time fee or mandatory to obtain a loan.

Some consumers were unaware they had purchased the membership.

One of them was Rosalie Hoover of Beloit, who said she wasn't told when she took a loan in about 2006 that she'd be paying for the membership.

"They'd give you the information for the club, but they'd never tell you you were paying that. They'd ask at the beginning if you would do that and you'd say 'No.' They said 'Fine,'" she said. "I was never aware I was still paying it. I always wondered why the interest was so high."

In order to receive a payment from the settlement, consumers had to confirm their address by Nov. 15.

Consumers were eligible for a refund if they took out a loan from Wisconsin Auto Title Loans between Jan. 1, 1999, and Dec. 31, 2010, and paid back an amount equal to or greater than the cash they received on the loan.

Consumers may be reimbursed up to 125% of the Continental Car Club fee they paid in addition to interest. The membership fees ranged from about $30 to $150, depending on the amount of the loan.

Peter Koneazny, litigation director at the Legal Aid Society in Milwaukee, which represents Wisconsin consumers, said many consumers were outraged about the high interest rates and don't understand that the settlement only applies to the membership fees.

The short-term loans were made against an underestimated value of the borrower's car and typically had to be paid off in a month. Interest rates were sometimes upward of 300% annually, but that wasn't an issue in the settlement. Loan takers still will have to pay back their loans.

Wisconsin Auto Title Loans Inc. is based in Green Bay and operates 22 locations in Wisconsin.

The deadline to make a claim has passed. Questions about the settlement — and auto title loan practices in general — can be directed to the Legal Aid Society of Milwaukee at (414) 727-5333.

More information on the title loan settlement is available toll free at (877) 435-4065 and on the Title Loan Settlement website, https://titleloansettlement.com/mainpage/Home.aspx.

For more consumer stories, viral stories, scam alerts, tips and the occasional freebie, visit the Public Investigator blog at www.jsonline.com/piblog.

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Twitter: @GitteLaasbyMJS

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