CFPB–FirstCash Settlement: What Servicemembers Need to Know
A detailed, plain-language guide to the CFPB’s FirstCash settlement, the Military Lending Act, and protections for servicemembers.
The Consumer Financial Protection Bureau (CFPB) has entered into a court-approved settlement with FirstCash, Inc. and its subsidiaries over alleged violations of the Military Lending Act (MLA) involving pawn loans to active-duty servicemembers and their families. This enforcement action highlights how federal law restricts the cost and terms of credit offered to the military community and what happens when lenders allegedly break those rules.
This guide explains the background of the case, the core protections of the MLA, the specific conduct alleged by the CFPB, the financial and compliance obligations imposed on FirstCash, and what servicemembers and their dependents can learn and apply from this settlement.
Background: Who Are the Key Players?
The Consumer Financial Protection Bureau (CFPB)
The CFPB is a U.S. federal agency created after the 2008 financial crisis to regulate consumer financial products such as loans, credit cards, and mortgages. It is responsible for enforcing federal consumer financial laws, including the MLA, and can bring lawsuits in federal court when it believes a company has violated those laws.
- Investigates potential violations of consumer finance laws
- Brings enforcement actions in federal court or through administrative proceedings
- Obtains consumer redress, civil money penalties, and injunctive relief
- Oversees compliance through supervision and examinations of certain lenders and service providers
FirstCash and Its Pawn Operations
FirstCash, Inc. is a large, Delaware-incorporated nonbank company headquartered in Fort Worth, Texas, operating over 1,000 pawnshops in the United States through various corporate subsidiaries. Pawnshops provide short-term loans secured by personal property such as jewelry, electronics, or tools. If the borrower does not repay the loan, the pawnbroker can sell the pledged item.
Unlike banks or credit unions, pawnshops are typically regulated under state law and, when dealing with servicemembers, federal MLA rules. The CFPB has authority to enforce the MLA against nonbank lenders such as pawn companies.
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The Military Lending Act: Core Protections
The Military Lending Act is a federal law designed to protect certain members of the armed forces and their dependents from predatory lending practices. Originally enacted in 2006 and expanded in 2015, the MLA applies to many forms of consumer credit, including some pawn loans, when made to a covered borrower.
Who Is a “Covered Borrower”?
Under Department of Defense regulations, a covered borrower generally includes:
- Active-duty members of the Army, Navy, Air Force, Marine Corps, Space Force, and Coast Guard serving more than 30 days
- Members of the National Guard or Reserve on active-duty orders exceeding 30 days
- Certain dependents of those servicemembers, such as spouses and qualifying children
Lenders can determine covered-borrower status through a Department of Defense database or eligible nationwide consumer reporting agency, which provides a regulatory “safe harbor” if used correctly.
Key MLA Protections for Servicemembers
| Protection | What It Means in Practice |
|---|---|
| 36% Military APR cap | The cost of credit, including certain fees and add-on products, cannot exceed a 36% Military Annual Percentage Rate (MAPR) for covered borrowers. |
| No mandatory arbitration | Creditors may not require servicemembers to give up the right to sue in court or to resolve disputes only through arbitration. |
| Mandatory disclosures | Lenders must clearly disclose the MAPR and certain contract terms orally and in writing before the borrower becomes obligated. |
| Restrictions on certain loan features | The MLA also limits practices such as using a check or vehicle title as security for certain loans and prohibits prepayment penalties in covered transactions. |
Together, these protections are intended to reduce the risk that servicemembers fall into cycles of debt that may affect both family finances and military readiness.
What the CFPB Alleged Against FirstCash
In a lawsuit filed in 2021, the CFPB alleged that, beginning in October 2016, FirstCash and its subsidiaries made thousands of pawn loans to MLA-covered borrowers that did not comply with federal law. While the settlement resolves the case, the company did not admit liability. The allegations nonetheless show the kinds of conduct regulators treat as serious MLA violations.
Alleged Excessive Interest Charges
The CFPB asserted that FirstCash charged MAPRs above the 36% cap on pawn loans to covered servicemembers and their dependents. Pawn finance charges, fees, and other costs must all be included in the MAPR calculation for MLA-covered transactions, and exceeding 36% violates the statute and regulations.
Arbitration and Contract Terms
According to the Bureau, loan contracts used with covered borrowers included mandatory arbitration provisions that are prohibited under the MLA. The presence of such clauses can unlawfully restrict a servicemember’s ability to seek relief in court for disputes arising from the credit transaction.
Missing or Inadequate Disclosures
The CFPB also alleged that FirstCash failed to provide all required MLA disclosures in connection with certain pawn loans to covered borrowers. For example, problems could include incomplete or unclear MAPR disclosures or failure to provide required information orally before the borrower became obligated.
Relationship to a Prior 2013 Order
The Bureau further alleged that the MLA issues violated obligations imposed under a 2013 CFPB consent order against a predecessor entity, Cash America International, Inc., which was later acquired and no longer exists as a separate company. That earlier order involved different products but required compliance measures relevant to FirstCash’s later conduct.
After entering the new settlement with FirstCash and confirming that the predecessor had met its obligations, the CFPB terminated the 2013 order. This illustrates how past compliance problems can inform future enforcement expectations, even when corporate structures change.
Terms of the Settlement and Court Order
The CFPB and FirstCash agreed to a stipulated final judgment and order in federal court, which was entered by the judge and now has the force of law. Under the order, FirstCash and its subsidiaries must provide consumer redress, pay a civil penalty, and implement compliance measures to prevent future MLA violations.
Financial Relief and Penalties
- At least $5 million reserved for redress to harmed servicemembers and their families affected by thousands of allegedly unlawful pawn loans.
- $4 million civil money penalty paid into the CFPB’s Civil Penalty Fund, which may be used to compensate consumers in this and other cases or for consumer education and financial literacy purposes.
Exact distribution methods, eligibility, and timing are generally governed by the order and any follow-up actions by the Bureau. Impacted borrowers are typically identified using lender records and/or claims processes.
Compliance and Screening Obligations
Beyond monetary relief, the order requires FirstCash to strengthen and maintain MLA compliance controls. Key requirements include:
- Adhering to the MLA 36% MAPR cap on all covered loans to servicemembers and dependents.
- Eliminating mandatory arbitration clauses and other prohibited contract terms for covered borrowers.
- Providing accurate MLA disclosures, including oral and written information, as required by law.
- Using a regulatory safe harbor to identify covered borrowers, such as performing checks through the Department of Defense database or an approved consumer reporting agency.
- Offering an MLA-compliant loan product or otherwise ensuring that servicemembers are not extended non-compliant pawn loans.
Failure to comply with the order can expose the company to additional penalties, contempt proceedings, or new enforcement actions.
What Servicemembers and Families Should Take Away
This settlement underscores how crucial it is for servicemembers and dependents to recognize MLA protections and to question high-cost credit offers that may appear routine at pawnshops or other nonbank lenders.
Recognizing MLA-Covered Transactions
Not all loans are covered by the MLA, but many common forms of consumer credit are, especially when extended to active-duty servicemembers and certain dependents. Covered loans often include:
- Certain payday loans, installment loans, and small-dollar cash advances
- Some vehicle title loans and high-cost personal loans
- Some pawn loans, depending on structure and term
When in doubt, borrowers may ask the creditor whether the account is MLA-covered and whether the creditor is applying the 36% MAPR cap and other required protections.
Warning Signs in Pawn and Short-Term Lending
Servicemembers considering pawn or short-term credit should be cautious when they see any of the following:
- Quoted annual percentage rates or fee structures that appear to exceed 36% when all costs are considered
- Contracts that require disputes to be handled only by arbitration or that limit the right to sue in court
- Missing, unclear, or rushed disclosures of loan cost and terms
- Pressure to sign quickly without time to review the contract or seek advice
The MLA makes certain non-compliant terms unenforceable, but avoiding harmful contracts in the first place is usually best.
How to Seek Help or File a Complaint
Servicemembers and their families who suspect MLA violations or abusive lending can:
- Contact a Judge Advocate General (JAG) office or legal assistance program for personalized legal advice.
- Submit a complaint directly to the CFPB, which tracks and responds to consumer complaints and may use them to inform supervisory or enforcement work.
- Report issues to their chain of command if financial stress is affecting readiness or duty performance.
Compliance Lessons for Pawnshops and Other Lenders
The FirstCash settlement offers a broader compliance roadmap for pawnshops, installment lenders, and other nonbank firms that serve military communities. Regulators expect not just policy commitments, but operational systems that consistently apply MLA protections.
Building an Effective MLA Compliance Program
Key elements for lenders include:
- Robust borrower-identification procedures using the Department of Defense MLA database or an eligible consumer reporting agency, to obtain safe-harbor protection when determining covered-borrower status.
- Automated MAPR calculations that account for all finance charges, fees, and add-on products to ensure the 36% cap is never exceeded.
- Standardized contract templates that exclude mandatory arbitration clauses and other prohibited terms for MLA-covered accounts.
- Clear disclosure scripts and forms to deliver required oral and written information consistently to every covered borrower.
- Ongoing training and monitoring so frontline employees understand MLA requirements and systems are periodically tested for compliance.
Consequences of Non-Compliance
Violating the MLA can lead to multiple consequences:
- Civil liability to consumers for actual damages, statutory damages, costs, and attorney’s fees
- Administrative or civil enforcement by agencies like the CFPB or the Department of Justice
- Void or unenforceable contract terms, such as certain arbitration clauses or excessive interest provisions
- Reputational damage, particularly harmful when serving military communities
The combination of restitution and civil penalties in the FirstCash case illustrates that the financial cost of non-compliance can be substantial.
Frequently Asked Questions (FAQs)
Q1: What is the Military Annual Percentage Rate (MAPR)?
The MAPR is a cost-of-credit measure used specifically for MLA-covered loans. It includes not only interest but also many fees and certain add-on products, such as some credit insurance, when calculating the 36% cap. This is often broader than the standard APR used in other consumer credit disclosures.
Q2: Did FirstCash admit to violating the Military Lending Act?
In the stipulated judgment, FirstCash and its subsidiaries agreed to the relief and compliance obligations but did not admit or deny the CFPB’s allegations, other than acknowledging facts needed for the court’s jurisdiction. This type of “no-admit, no-deny” settlement structure is common in regulatory cases.
Q3: How will affected servicemembers receive compensation?
The order requires FirstCash to set aside funds to provide redress to servicemembers and their families harmed by the alleged unlawful pawn loans. The CFPB typically uses company records to identify eligible consumers and may administer payments directly or through a third-party administrator. Individual borrowers do not usually need to sue to receive basic redress under such an order, although they may still have private legal rights.
Q4: Are all pawn loans to servicemembers covered by the MLA?
Not every pawn loan falls under the MLA, but many do, depending on factors such as the type of borrower, loan term, and structure. When a pawn loan is MLA-covered and the borrower is an active-duty servicemember or qualifying dependent, the lender must comply with all MLA protections, including the 36% MAPR cap and disclosure requirements.
Q5: Can a servicemember waive MLA protections in a contract?
No. MLA protections are statutory rights that cannot be waived by contract. Even if a contract contains terms inconsistent with the MLA, those provisions may be unenforceable, and the creditor could face liability for including them.
References
- CFPB reaches settlement with FirstCash, Inc. and its subsidiaries for Military Lending Act violations — Consumer Financial Protection Bureau. 2025-07-22. https://www.consumerfinance.gov/about-us/newsroom/cfpb-reaches-settlement-with-firstcash-inc-and-its-subsidiaries-for-military-lending-act-violations/
- CFPB reaches settlement with FirstCash in connection with alleged MLA violations — Consumer Finance Monitor. 2025-07-23. https://www.consumerfinancemonitor.com/2025/07/23/cfpb-reaches-settlement-with-firstcash-in-connection-with-alleged-mla-violations/
- Enforcement Actions — CFPB announces $9 million settlement with FirstCash, Inc. for Military Lending Act violations — VitalLaw (Wolters Kluwer). 2025-07-25. https://www.vitallaw.com/news/enforcement-actions-cfpb-announces-9-million-settlement-with-firstcash-inc/blw01757b1dc807b047cab6df207a425eee91
- Military Lending Act – Limitations on Terms of Consumer Credit Extended to Service Members and Dependents — U.S. Department of Defense, 32 C.F.R. Part 232 (regulation; current as of 2024). https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-M/part-232
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