In re Cash-N-Go, Inc.
| Decision Date | 30 November 2022 |
| Docket Number | 1012, Sept. Term, 2021 |
| Parties | In the MATTER OF CASH-N-GO, INC., et al. |
| Court | Court of Special Appeals of Maryland |
Argued by: Jason C. Buckel (T. Lee Beeman, Jr., Buckel, Levasseur, Pillai & Beeman, LLC, Cumberland, MD), all on the brief, for Appellant.
Argued by: Philip Ziperman (Brian E. Frosh, Atty. Gen., Baltimore, MD), all on the brief, for Appellee.
Panel: Kehoe, Ripken, Tang, JJ.
On April 1, 2019, the Consumer Protection Division ("the Division") of the Office of the Attorney General of Maryland filed a statement of charges against Cash-N-Go, Inc., Cash-N-Go Pawnbrokers, LLC, Cash-N-Go Pawnbrokers, Inc., and the three business entities’ sole owner, Brent Jackson ("Jackson") (collectively referred to as "Cash-N-Go"), for violations of several Maryland consumer protection laws. Cash-N-Go denied all allegations, and the Division referred the case to the Office of Administrative Hearings ("OAH"). After conducting a contested case hearing, the administrative law judge ("ALJ") filed a proposed decision, finding that Cash-N-Go had engaged in unfair or deceptive trade practices in violation of the Maryland Consumer Protection Act ("CPA").1 The Division subsequently adopted the ALJ's proposed factual findings and conclusions of law, issued a cease-and-desist order prohibiting Cash-N-Go from continuing its unlawful consumer lending practices, and held all Cash-N-Go parties jointly and severally liable for restitution payments and civil penalties.2
On March 16, 2020, Cash-N-Go filed a petition for judicial review of the Division's final order in the Circuit Court for Allegany County. The circuit court held a hearing on July 9, 2021, and subsequently affirmed the Division's findings and assessment of penalties. Cash-N-Go now appeals to this Court. For the reasons that follow, we shall affirm.
Cash-N-Go presents the following issues for our review:3
We hold (1) that the Division is not estopped from ordering penalties against Cash-N-Go for violating Maryland's consumer protection laws; (2) that the Division's assessment of penalties and restitution did not violate the Excessive Fines Clause of the Eighth Amendment; and (3) that any error made by the circuit court in excluding Cash-N-Go Pawnbrokers, LLC, Cash-N-Go Pawnbrokers, Inc., and Brent Jackson from participating as parties to the petition for judicial review was harmless.
The Division adopted all factual findings made by the ALJ at the conclusion of an evidentiary hearing; no party objected to those factual findings. Therefore, the following statement of facts is largely derived from the Division's final order.
Cash-N-Go is a Maryland company that was incorporated in January of 1998 as "Cash & Go, Inc." before changing its name to "Cash-N-Go, Inc." in May of 2010. Cash-N-Go, Inc. has also conducted business as Cash-N-Go Pawnbrokers, Inc., Cash-N-Go Pawnbrokers LLC, and Cash-N-Go. Jackson is the sole owner and President of all Cash-N-Go business entities, and he has directed, overseen, and managed the business activities of each entity since their inceptions. Cash-N-Go obtained a check cashing license from the Maryland Commissioner of Financial Regulation ("CFR") and subsequently obtained a second-hand precious metal and pawnbroker license. Cash-N-Go has never been licensed by the CFR as an installment or consumer lender.
Cash-N-Go began offering financial services that it referred to as "title loans," "title pawns," or "cash advances," in 2007. The services were advertised as "loans, pawns, or purchasing valuables" at "the best value for [Cash-N-Go's] customers." Regarding "car title pawns," specifically, Cash-N-Go's website used language such as: Since Cash-N-Go began offering financial services in 2007, it has completed 1601 title pawn transactions, ranging in amount from $140 to $6,000 each.
Generally, consumers would drive to a Cash-N-Go location to request a loan for personal, family, or household purposes. In turn, Cash-N-Go would lend them the money with the expectation of repayment on the principal amount of the loan plus interest. In accordance with Cash-N-Go's standard operating procedures, employees were instructed to base the amount of money they could offer for title pawns on the vehicle's condition, the consumer's ability to pay back the loan, and up to 30% of the vehicle's rough value. As a prerequisite to receiving a loan, the consumer was required to provide a Cash-N-Go employee with a free and clear title to his or her vehicle, proof of current vehicle registration, proof of current insurance, a spare key to the consumer's vehicle, a valid driver's license, proof of social security number, a current utility bill, and a current pay stub.4
Once the consumer provided the requisite documents, the employee would conduct a cursory inspection of the consumer's vehicle to record any preexisting damage and ensure that the provided spare key unlocked and started the car. Thereafter, the employee would prepare the loan paperwork, which included a contract, bill of sale, and a Maryland daily transaction report form. The employee would show the consumer where to sign, sometimes without giving the consumer a chance to review the documents. In order to "speed up the process" employees were instructed that consumers were not required to wait while the employees filled out their portion of the daily transaction forms, "as long as [the consumers] sign[ed][.]" The employee would then deliver the cash advance or issue a check made payable directly to the consumer, who was then free to leave, loan in hand. Next, the employee would register the vehicle titles as pawned property with Maryland's Regional Automated Property Information Database ("RAPID").5 Afterward, the employee would file a lien on the vehicle with the Maryland Motor Vehicle Administration ("MVA") and log the transaction in an internal spreadsheet.
Every title pawn contract that Cash-N-Go entered with consumers conveyed that the consumer would be required to make a payment within 30 days of receiving the loan. The contract contained a payment schedule, titled "minimum amount due," indicating a monthly charge of 30% of the loan principal (labeled "pawnshop charge"). The fine print at the bottom of the contract indicated that paying the pawnshop charge would allow consumers to extend their obligation to repay the loan principal by another month. Extending the loan each month by payment of the pawn charge would amount to an annual interest rate of 360%.
Notably, the contract did not accurately convey the structure of the loan. To pay off their loans, consumers were required to pay the entire principal amount plus 30% interest within 30 days. The loan documents did not indicate that minimum payments (the pawnshop charge) would not be subtracted from the principal amount owed. Nor did the documents adequately inform the consumer that if they only made the minimum monthly payment on their loan, the repayment terms would extend indefinitely. When consumers made monthly payments on the loans, they rarely received receipts. If a receipt was issued, it did not clearly indicate that the consumer's payment was being credited toward interest rather than the loan principal.
One consumer who contracted with the Cash-N-Go location in Hagerstown expressed that the "receipts" he received after making monthly payments relayed nothing more than his "loan number, the payment date, the amount of [his] payment, and the remaining loan balance," and that it "seemed like [his] loan balance never went down[.]" Another consumer who contracted with Cash-N-Go's Westminster location stated that he "had no idea what the total cost of the loan would be" and that he "did not know how long [he] would have to make payments on the loan." Another Westminster consumer testified that he knew "something [was not] right" when he noticed that, even after several months of paying more than the contracted minimum amount on his loan, his "principle [sic] was the same."
Consumers were thus faced with either paying significantly more money on their loans than they originally understood or risking repossession of their vehicles. The grace period for late payments was typically two weeks, whereafter an officer or agent of Cash-N-Go would, without written notice, repossess the consumer's vehicle using the spare key that the consumer provided to obtain the loan. In order to recover their repossessed vehicles from Cash-N-Go, consumers were required to pay the outstanding balance on their loans plus additional fees. Occasionally, Cash-N-Go would sell a repossessed vehicle without providing the consumer with a full accounting of the sale proceeds. Additionally, Cash-N-Go failed to return to consumers any proceeds that exceeded the outstanding balances of their loans. Cash-N-Go collected a total of over $2.2 million in repayment funds on the 1,601 loans it made between 2007 and 2016 and repossessed 147 vehicles.
On April 1, 2019, the Division filed a statement of charges against Cash-N-Go, asserting that the company was in violation of Maryland consumer lending laws for unfair and deceptive trade practices, such as providing loans and offering credit without a license, charging usurious interest rates, and taking prohibited security interests in consumers’ personal property....
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