NEW YORK–(BUSINESS WIRE)–Bragar Eagel & Squire, P.C., a nationally recognized stockholder 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, both dates inclusive (the “Class Period”). Investors have until March 15, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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In September 2016, the Company, then known as First Cash Financial Services Inc., finalized its merger with pawnshop provider 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 again changed its name to FirstCash Holdings, Inc.
The Military Lending Act (“MLA”) provides protections for active-duty service members and their dependents in connection with the extension of consumer credit. Among other protections, the MLA limits the interest rates that may be charged on consumer loans to active-duty armed forces members and their covered dependents to no more than 36%. Further, the MLA prohibits lenders from requiring covered parties to submit to arbitration, as well as 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 members of the military or their dependents in violation of the MLA, violations relating to debt collection, failure to prevent or timely detect problematic conduct due to inadequate internal compliance, and failure to maintain required records (the “Order”). In the Order, Cash America agreed to cease and desist from the 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 in order to provide redress to affected consumers.
In 2015, the Department of Defense expanded the MLA to cover more credit products, including pawn loans. Newly covered creditors, which included pawn brokers, had until October 3, 2016 to bring their operations into compliance with the new rules.
In response to the expansion of the MLA, which prohibited the Company from issuing loans with interest rates higher than 36%, FirstCash claimed that it was “unable to offer any of its current credit products, including pawn loans, to members of the U.S. military or their dependents.” The Company also claimed throughout the Class Period that it employed robust systems, policies, and 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 was engaged in widespread and systemic violations of the MLA and had made thousands of loans to active-duty service members 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., had violated the MLA by charging higher than the allowable 36% annual percentage rate on over 3,600 pawn loans to more than 1,000 active-duty service members and their dependents. The CFPB also alleged that FirstCash had violated the 2013 CFPB Order prohibiting future MLA violations, which remained in effect and applied to FirstCash following the September 2016 merger of the Company and First Cash America
As a result of these revelations, the price of FirstCash stock plummeted over $7 per share, or 8%, in a single day to close at $78.64 per share on November 12, 2021 on abnormally high trading volume. The stock continued to fall in subsequent days as the market digested the news, dropping another $10 per share by November 18, 2021.
If you purchased or otherwise acquired FirstCash shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Alexandra Raymond by email at email@example.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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Bragar Eagel & Squire, P.C. 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, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.