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Press Release

Press Release  AG Obtains Judgment Voiding Hundreds of Illegal Loans to Massachusetts Consumers in Case Against Online Auto Title Lender

Company Permanently Barred from Operating in Massachusetts; Vehicle Liens Dissolved, New Titles Issued
For immediate release:
5/25/2017
  • Office of Attorney General Maura Healey

Media Contact   for AG Obtains Judgment Voiding Hundreds of Illegal Loans to Massachusetts Consumers in Case Against Online Auto Title Lender

Emalie Gainey

BOSTON — Hundreds of illegal loans made to Massachusetts consumers by an unlicensed online auto title lender are now void pursuant to a judgment announced today by Attorney General Maura Healey. The company has also been permanently barred from operating in Massachusetts, and liens they placed on vehicles have been dissolved with new titles issued to consumers.

The final judgment and permanent injunction entered in Suffolk Superior Court against Liquidation, LLC (Liquidation) permanently bars the company from advertising, soliciting, selling or assigning any loans in Massachusetts and from collecting on any of those loans already made to consumers.

Pursuant to the judgment, all of the loans issued by Liquidation in Massachusetts are void and all of the liens it placed on Massachusetts vehicles are dissolved. The judgment also prohibits the company from repossessing any vehicles in connection with the loans.

“With this judgment, Massachusetts borrowers will be freed from paying the illegal loans made by this sham company,” said AG Healey. “This unlicensed auto title lender is prohibited from ever doing business in Massachusetts again.”

More than 200 loans made by Liquidation to Massachusetts borrowers are now void under the terms of the judgment. With the assistance of the Massachusetts Registry of Motor Vehicles Title Division, more than 50 liens on consumers’ vehicles have been dissolved and the vehicle owners have been issued new, lien-free titles. Several vehicles that were repossessed by Liquidation and are currently at auction houses are eligible to be returned to their prior owners. The judgment also orders Liquidation to pay $197,600 restitution and $1,135,000 in civil penalties.

In March 2016, AG Healey sued Liquidation for allegedly targeting consumers and providing them with unlawful, high-interest loans on their otherwise paid-off vehicles and, when they could not pay, seizing and selling their vehicles.

According to the Suffolk Superior Court’s findings and judgment, Liquidation, also doing business as Auto Loans, LLC, Car Loan, LLC, and Sovereign Lending Solutions, LLC, routinely made and collected upon short-term loans containing undisclosed, unfair, and deceptive terms, including illegally high interest rates and an abusive and undisclosed interest-only payment schedule that resulted in a final unknown balloon payment that exceeded the principal amount originally lent to the consumer.  

A sample of loan agreements obtained by the AG’s Office in its investigation revealed loans ranging from $700 to more than $9,000, with interest rates ranging from 181 percent to 619 percent—rates far in excess of state civil and criminal usury laws that limit interest on small loans of $6,000 or less to 12 percent and 20 percent for loans above the $6,000 threshold, respectively. More than 200 Massachusetts consumers statewide were victimized by this unlawful lending scheme.

Most consumers applied for loans from Liquidation online or by calling a number listed on its website. Liquidation and entities affiliated with it were not licensed to originate small loans in Massachusetts. Liquidation also did not provide consumers with copies of their loan agreements and did not disclose a number of abusive contract terms such as high interest rates, an expected large lump sum final payment, and a requirement that any disputes be mediated in New Zealand.

Although consumers were led to believe that they would pay off their loans in one year, they were never informed that their final payment would be more than the amount originally borrowed. Many consumers were unable to come up with the unexpected final payments and were forced to extend their loan terms and continue paying the high interest rates or risk losing their vehicles. Liquidation also required consumers to install GPS tracking units in their vehicles to ensure regular loan repayment and for purposes of repossession.

When borrowers missed or were late on a payment, Liquidation attempted to collect on the debt through repeated harassing phone calls and e-mails. In numerous instances, Liquidation repossessed the consumers’ vehicles and sold them at auction houses in Massachusetts, with Liquidation retaining proceeds.

In order to perpetuate and conceal their scheme and deceive consumers and regulators, Liquidation operated under several other fictitious business names and from virtual office spaces and post office boxes around the country. The company also purports to have reorganized in the Cook Islands.

The AG’s Office continues to be active in this area and wants to hear from Massachusetts consumers who have information regarding unfair or deceptive lending. Consumers with tips or questions can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.

The matter was handled by Assistant Attorney General Jared Rinehimer of Attorney General Healey’s Consumer Protection Division and Assistant Attorney General Justin Lowe, with assistance from Investigator Anthony Crespi, Paralegal Ivy Yan, Kim McDonald and the Auto Team from the AG’s Consumer Advocacy and Response Division, and Joyce Mover and William McVey of the Massachusetts Registry of Motor Vehicles.

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Media Contact   for AG Obtains Judgment Voiding Hundreds of Illegal Loans to Massachusetts Consumers in Case Against Online Auto Title Lender

  • Office of the Attorney General 

    Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.
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