1. Opinion

Editorial: Borrowers need protection from Marlin Financial

State and federal lending regulations exist to protect consumers from being surprised — and overwhelmed — by ballooning debt. Marlin Financial, a shadowy auto lender doing business around Florida, seems to be skirting those protections to the great detriment of its customers. Attorney General Pam Bondi has opened an investigation, but in the meantime Floridians should beware.

Tampa Bay Times business reporter Malena Carollo chronicled the business practices of Marlin, which began operating in Florida in 2015 by offering quick-turn consumer loans, with borrowers commonly using their cars as collateral. Marlin is authorized to makes loans up to $25,000, with interest rates capped on a stair-step basis. It can charge up to 30 percent interest on the first $3,000 of a loan, 24 percent on the next $1,000 and 18 percent after that up to $25,000. But Carollo talked to several Marlin customers and reviewed lawsuits against the company alleging that by requiring borrowers to purchase its debt cancellation policy, they ended up owing far more than they realized and were charged a much higher interest rate.

Debt cancellation is a relatively cheap (in price and value) product that borrowers can purchase to protect themselves if, for example, their car is totalled while they are still paying off their loan. By law, it must be optional, but Marlin customers reported that the company's online loan application process literally shut down when they declined it and only worked when they accepted it. And it was anything but cheap. With debt cancellation, the interest rate on one Temple Terrace man's $10,000 loan — capped by law at 22 percent — skyrocketed to 66 percent. On top of that, Carollo found, Marlin issued larger loans than it was authorized to make and failed to give customers a chance to get their belongings out of cars that were repossessed — which would be illegal.

But Marlin customers would be hard-pressed to find an office where they could lodge a complaint or even seek loan assistance. The company advertises as operating in Florida's major cities with "convenient branches" in Tampa, Orlando and Miami. No such branches exist, only a single office in a Miami high-rise staffed with a single employee who didn't want to discuss anything about Marlin — even who owns it. That would be Jeremy Tolan, the lone listed officer, who has family ties to other lending businesses that have drawn scrutiny from authorities in three states.

This is, in many ways, a tale of a classic Florida scam: a shadowy company with no brick-and-mortar presence, operating below the radar but still managing to bilk customers out of thousands. The stack of complaints against Marlin is growing: 12 in the last four years with the Office of Financial Regulation, 19 with the state Attorney General and 32 with the Better Business Bureau.

The Attorney General's office opened an investigation in November, which is better late than never. But Florida's next attorney general should take a more proactive approach to consumer protection and not wait for one company's list of victims to grow so long.

Companies like Marlin Financial are the very reason banking and lending rules are necessary. Borrowing limits, interest rate caps and disclosure requirements all work to protect consumers. But as long as bad actors try to flout the rules, consumers also have to take steps to protect themselves.