Some car owners who have used their vehicles for collateral in auto title loans through US Pawn and Loan at Austin could see their debt cancelled and titles returned as the result of a civil lawsuit filed by state Attorney General Dustin McDaniel.

But Toby R. Troutman of Austin, named in McDaniel’s press release announcing the lawsuit, on Monday said McDaniel is over-reaching the authority of the office. People have the right to buy and sell their own property, "If the attorney general thinks he can dictate that right, there is too much power and authority…I have not done anything illegal," he remarked.

In his press release, McDaniel announced he has filed a consumer-protection lawsuit against Troutman as owner of TRT Investments Inc., accusing Troutman of marketing illegal auto title loans with interest rates of more than 300 percent.

"No matter whether it’s a high-interest title loan or a payday loan, these types of lending activities are bad for consumers and illegal in Arkansas," McDaniel said. "I have made it a priority in my office to protect Arkansans against usurious lending practices."

Troutman said that, "I do not do title loans. I never did title loans. What I do is let people access the equity they have in a vehicle," Troutman said.

The press release notes that the lawsuit was filed in Pulaski County Circuit Court, naming Troutman, as owner of TRT Investments Inc., as operator of US Pawn and Loan.

According to the lawsuit, US Pawn and Loan offered auto-title loans, also known as title pawns, which are short-term, high-interest loans. The borrower uses the car title as collateral and the lender is given a key to the car. The borrower still has use of the vehicle but the lender can seize the car to sell it if the borrower does not meet payment obligations.

"I am licensed car dealer. I buy, sell and lease cars in the course of business," Troutman said. He had cooperated with the attorney general’s office and in explaining the business, he said.

McDaniel accuses US Pawn and Loan of making more than 85 title-loan transactions with more than 60 persons. The effective interest rate for each of the loans exceeded 300 percent. The press release notes that the business charged $375 a month in interest and fees on a $1,500 loan, with the monthly rate being assessed every month the loan was outstanding.

McDaniel claims that Troutman attempted to disguise the nature of the title loans as the sale of the borrower’s vehicle with the simultaneous sale or lease of the same car back to the consumer. US Pawn and Loan used terms like "sales/leaseback loan" on its website.

Troutman said that, "[McDaniel] is just shooting in the dark."

"If he really thought I was doing something illegal, he would have had me arrested. He doesn’t know, so instead he files in civil court," Troutman said.

The lawsuit asks that US Pawn and Loan be required to cancel the debt obligations, return vehicle titles to the owners, and pay restitution, civil penalties, attorneys’ fees and costs.