Introduction

A screen shot of the annual reports from TitleMax.

The nation’s three major auto-title lenders are pressing Virginia officials to keep a wide range of their business records secret, including details about how often they get in trouble with regulators and how many cars they repossess from buyers who can’t repay their loans.

The bid for secrecy is clear from heavily redacted annual reports the lenders filed with Virginia officials on Thursday. The redacted reports were submitted to the state as part of a public records dispute between the Center for Public Integrity and the firms TitleMax of Virginia Inc.; Anderson Financial Services LLC, doing business as LoanMax; and Fast Auto Loans Inc.

Title loans are controversial because of punishing interest rates they can impose on borrowers. During 2014, the average title loan in Virginia was for $1,048 and took nearly a year to repay at 222 percent annual interest, according to data the state aggregates from all title lenders.

The public records dispute arose in November when the Center requested copies of the 2014 annual reports, which include more detailed and individual data on their operations, the title lenders filed with the Virginia Bureau of Financial Institutions.

The annual reports include sales and income figures, the volume of loans made and their terms, as well as sensitive information such as how often the lenders repossess cars when buyers fail to pay them. The firms also must disclose if they’ve been investigated or cited by regulators in other states or at the federal level. The annual reports don’t contain the names of any borrowers or their financial condition.

Virginia officials said nobody had asked for the annual reports before the Center made its request, and they could find no legal basis to not release them. But state officials gave the title loan companies a chance to submit redacted copies of their annual reports and cite a legal basis for withholding any portion of the reports.

In its report filed Thursday, Fast Auto Loans disclosed that it operates 69 stores in Virginia, but little else. The firm blacked out details such as the number of loans it makes and the interest rates it charges, the default rate and the number of cars it repossesses. That’s “proprietary and financial information” and making it public would be “detrimental” to the business, Fast Auto wrote.

Fast Auto answered “yes” to a question in the report form that asks if the company or its officers had been “the subject of any regulatory investigation” by any state or federal agency in the past three years. But it concealed details, arguing, “Such information is protected from disclosure as confidential due to the pending nature of the investigations.”

While Fast Auto revealed the names of some top executives, including president and CEO Robert I. Reich, it scrubbed out ownership details.

TitleMax of Virginia also disclosed little beyond the name of CEO Tracy Young and that it operates 96 stores in the commonwealth. The company argued that it wanted to protect “trade secrets” from its competitors.

“This would permit competitors to identify the strengths and weaknesses of the TitleMax’s products and their financial risks, which would cause substantial competitive harm to TitleMax,” the report states.

Anderson Financial/dba LoanMax didn’t name the company’s officers, though it listed its headquarters address in Alpharetta, Georgia, and noted it had 73 stores in Virginia.

LoanMax noted that it had reported regulatory actions to the commission “under the assumption that the annual report would not be publicly disclosed.”

“Disclosing the information in question to the public could create a disincentive for motor vehicle title lenders to disclose information to the commission,” according to the report.

The commission will hold a hearing and take testimony on the dispute Jan. 22 in Richmond.

Whether the records are public is not entirely clear because the State Corporation Commission operates outside the Virginia open records laws.

That should change, said Megan Rhyne, executive director of the Virginia Coalition for Open Government.

Rhyne said the commission “regulates so many of the businesses that have direct impact on the public, yet there is far less ability to view the regulatory records … than the records of any other government agency or department.”

Some Virginia lawmakers are taking aim at the high interest rates charged by title lenders. This week, Gov. Terry McAuliffe, a Democrat, voiced his support for a bill to cap rates at 36 percent a year. That’s the ceiling for loans made to military personnel.

Yet efforts to limit interest charges have failed repeatedly in many states, including Virginia. A Center for Public Integrity investigation in December found that about 150 bills to reel in interest rates or curb abusive lending tactics died in 20 state legislatures over the past five years. Lenders often won the day by arguing rate caps would force them to shut their doors.

Executives with the title loan companies could not be reached for or declined to comment about the Center’s findings.

Critics accuse big title lenders of lining up support in statehouses with hefty political contributions, including more than half a million dollars in Virginia over the past decade.

In 2015, bills in the Virginia General Assembly to cap interest rates, restrict the number of loan stores in some jurisdictions and keep the stores at least 10 miles away from military bases all failed to pass.