Legal Aid Society, state reach settlement with auto title loan co.

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The state of Wisconsin and the Legal Aid Society of Milwaukee Inc. have reached a multimillion dollar preliminary settlement with an auto title loan company.

The settlement requires a $2.75 million payment for restitution, according to a news release from the state Department of Justice.

According to a news release from the attorney general’s office, Wisconsin Auto Title Loans Inc., a Georgia-based company that operates 22 locations in Wisconsin, misled consumers about purchasing a motor club membership. Some customers said they were not told the cost of the membership was included in their loan cost, or were told it was mandatory, according to the release.

The action began as a private class action lawsuit filed by the Legal Aid Society of Milwaukee, which was named Class Counsel in the litigation. The state subsequently joined the lawsuit by filing an amended complaint seeking restitution for consumers, penalties and other relief under the Wisconsin Consumer Act and other state consumer protection laws.

As part of the settlement, which will undergo a fairness hearing in in December, the title loan company must release the approximately 36,000 liens it currently holds on vehicles and refrain from selling its motor club membership for two years from the date the settlement is approved. The company must also extinguish all fees and finance charges on open accounts.

The settlement agreement said the company settled to avoid litigation costs, and that it denies the validity of the allegations against it. The company’s attorney, Kenneth Nowakowski, declined to comment further Monday.

The next step is a Dec. 10 hearing, when a judge will decide whether to formally approve the deal. Members of the class-action suit will have an opportunity to opt out or object to the settlement.

The Associated Press also contributed to this report.