LITTLE ROCK — Attorney General Dustin McDaniel filed a lawsuit Thursday accusing a Lonoke County pawnbroker of marketing illegal auto-title loans with interest rates of more than 300 percent to dozens of Arkansas consumers.
McDaniel filed the suit in Pulaski County Circuit Court against Toby R. Troutman, owner of TRT Investments Inc. Troutman and TRT Investments operate US Pawn and Loan in Austin.
The suit alleges that US Pawn and Loan offered auto-title loans, also known as title pawns, to vehicle owners, requiring them to provide the title and a key to a vehicle as collateral. In this arrangement, the borrower retains the vehicle but the lender keeps the right to seize or sell the vehicle if the borrower fails to meet payment obligations, according to the suit.
McDaniel alleges that US Pawn and Loan engaged in at least 86 title-loan transactions with at least 63 Arkansas consumers and that the effective interest rate for each of the loans illegally exceeded 300 percent.
The suit alleges that Troutman attempted to disguise the nature of the title loans as the sale of the borrower’s vehicle with the simultaneous sale or lease of the same car back to the consumer, using terms like “sales/leaseback loan” on its website.
A phone message left at US Pawn and Loan on Thursday was not immediately returned.