NEW YORK–(BUSINESS WIRE)–Bragar Eagel & Squire, PC, a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed against FirstCash Holdings, Inc. (“FirstCash” or the “Company”) ) (NASDAQ: FCFS) in the United States District Court for the Northern District of Texas on behalf of all persons and entities who purchased or otherwise acquired FirstCash securities between February 1, 2018 and November 12, 2021, the two dates inclusive (the “Class Period”). Investors have until March 15, 2022 to ask the Court to be named lead plaintiff in the lawsuit.
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In September 2016, the company, then known as First Cash Financial Services Inc., completed its merger with pawnbroker and payday lender Cash America International, Inc. (“Cash America”). Following the merger, the combined company changed its name to FirstCash Inc. Similarly, following a December 2021 merger with lending company American First Finance, the company changed its name again to FirstCash Holdings, Inc.
The Military Loans Act (“MLA”) provides protections for active duty military personnel and their dependents under the extension of consumer credit. Among other protections, the MLA limits the interest rates that can be charged on consumer loans to active duty members of the armed forces and their covered dependents to a maximum of 36%. In addition, the MLA prohibits lenders from requiring covered parties to submit to arbitration, as well as from imposing other limitations.
In November 2013, Cash America entered into a consent order with the Consumer Financial Protection Bureau (“CFPB”) for making loans to covered service members or their dependents in violation of the MLA, violations related to the recovery of receivables, failure to prevent or detect in a timely manner problematic behavior due to inadequate internal compliance and failure to maintain required records (the “Order”). In the Order, Cash America agreed to cease and desist from violations and to implement a plan designed to ensure its future compliance with the terms of the Order. The CFPB fined Cash America $5 million and ordered it to deposit $8 million into an account to provide relief to affected consumers.
In 2015, the Department of Defense expanded the MLA to cover more credit products, including pawnbrokers. Newly covered creditors, including pawnbrokers, had until October 3, 2016 to bring their operations into compliance with the new rules.
In response to the MLA expansion, which prohibited the company from issuing loans with interest rates above 36%, FirstCash claimed it was “unable to offer any of its current credit products , including pawnbrokers, to members of the U.S. military or their assigns.” The Company also asserted throughout the Class Period that it used systems, policies and robust procedures to ensure its regulatory compliance and adherence to applicable laws, rules and regulations governing its business, including the MLA.
Despite these assurances, unbeknownst to investors throughout the Class Period, FirstCash engaged in widespread and systemic violations of the MLA and provided thousands of loans to active duty military and their dependents at usurious rates. On November 12, 2021, the CFPB filed a lawsuit alleging that FirstCash and its subsidiary, Cash America West, Inc., violated the MLA by charging more than the allowable annual percentage rate of 36% on more than 3,600 loans on pledge to more than 1,000 assets. -service service members and their dependents. The CFPB also alleged that FirstCash violated the CFPB’s 2013 order prohibiting future violations of the MLA, which remained in effect and applied to FirstCash after the company’s September 2016 merger with First Cash America.
Following these revelations, FirstCash’s stock price fell more than $7 per share, or 8%, in a single day to close at $78.64 per share on November 12, 2021 on trading volume abnormally high. The stock continued to decline in the following days as the market digested the news, losing another $10 per share by November 18, 2021.
If you have purchased or otherwise acquired FirstCash shares and suffered a loss, are a long-term shareholder, have information, want to know more about such claims, or have questions about this announcement or your rights or interests in these questions, please contact Brandon Walker or Alexandra Raymond by email at [email protected], by phone at (212) 355-4648, or by by filling out this contact form. There is no cost or obligation for you.
About Bragar Eagel & Squire, PC:
Bragar Eagel & Squire, PC is a nationally recognized law firm with offices in New York, California and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivatives and other complex litigation before state and federal courts across the country. For more information about the company, please visit www.bespc.com. Lawyer advertisement. Prior results do not guarantee similar results.