Fourth Circuit Keeps TitleMax in Pennsylvania's $52.7M Usury Case
What happened. TitleMax of South Carolina does not lend in Pennsylvania. It has no offices there, no employees there, no stores there, and every borrower has to show up in person at a South Carolina branch to sign.1 On August 5 the Fourth Circuit held that none of that gets it out of a Pennsylvania enforcement proceeding seeking more than $52.7 million.1
Pennsylvania's Department of Banking and Securities alleges TitleMax SC entered into at least 5,270 title-secured loan agreements with Pennsylvania residents, carrying interest rates as high as 720%.1
The order to show cause asserts 5,270 separate counts and requests a civil penalty of $10,000 per offense, which the court totals at more than $52.7 million.1
TitleMax SC went to federal court in South Carolina to stop the proceeding. The Fourth Circuit told it to go back and make its constitutional arguments inside Pennsylvania's own system.1
This is the second federal circuit to say so. The Fifth Circuit affirmed dismissal of an affiliate's near-identical suit on January 9, 2026.6
What Alternative Business Lenders Need to Know
Start with the honest limit, because it is a real one. This is consumer title lending under Pennsylvania's Loan Interest and Protection Law, and state usury caps of that kind do not reach most commercial financing. If you fund merchant advances, factor receivables, or write equipment paper to businesses, no part of this decision says a rate cap now applies to your book. Anyone who tells you otherwise is selling something.
What does transfer is the jurisdictional mechanic, and it is not usury-specific at all. It also does not come from this decision. The Fourth Circuit here decided only where TitleMax gets to argue, not whether Pennsylvania law reaches it. The reach question was answered in 2022 by the Third Circuit, which held that a title lender originating in Delaware, Ohio, and Virginia was not operating "wholly outside of Pennsylvania" because it "received payments from within Pennsylvania and maintained security interests in vehicles located in Pennsylvania."1 9 Put the two together and you get the shape that matters: your in-state servicing conduct is what exposes you to a state's law, and now you cannot leave that state's forum to fight about it.
What did the court actually hold?
Two things, and the trade coverage has mostly reported the first one only. The panel of Judges Thacker, Rushing, and Benjamin affirmed dismissal of the claims attacking the order to show cause, applying Younger abstention: the Pennsylvania administrative proceeding is ongoing and judicial in nature, it implicates the state's substantial interest in enforcing its consumer lending and usury laws, and it gives TitleMax an adequate chance to raise its federal constitutional defenses there and on review in Pennsylvania's courts.1 2
The second holding is why the disposition line reads "Affirmed in part, vacated in part, and remanded with instructions" rather than a clean affirmance.1 TitleMax had also challenged a 2024 investigative subpoena. The court found that piece unripe, because the subpoena is not self-executing and has not been enforced, so no present injury exists yet. Unripe claims are a jurisdictional defect, so they must be dismissed without prejudice, and the district court had dismissed them with prejudice. The Fourth Circuit vacated that part and sent it back to be fixed.1 Practically TitleMax still lost. But several write-ups have flattened this into "affirms dismissal," and if you are tracking the docket, the subpoena fight is preserved, not extinguished.5 3
Which in-state activities did the jurisdiction turn on?
Be precise about which court said what, because it changes how much weight the list carries. The Fourth Circuit recites this conduct as background; it is Pennsylvania's allegation in the order to show cause that TitleMax conducted loan-servicing activities in the state including "perfecting or recording liens with the Pennsylvania Department of Transportation, collecting payments from Pennsylvania residents, communicating with borrowers in Pennsylvania, and repossessing vehicles located in Pennsylvania."1 The same four activities were already found legally sufficient in 2022. Reviewing that earlier Third Circuit decision, the Fourth Circuit records that although TitleMax "did not have offices, employees, agents, or physical stores in Pennsylvania," the Third Circuit "noted that TitleMax recorded liens with Pennsylvania state authorities, collected payments from Pennsylvanians, communicated with Pennsylvania borrowers, and repossessed vehicles in Pennsylvania," and on that basis held the conduct was not "wholly outside of Pennsylvania."1 9 Applying Pike balancing, that court found applying Pennsylvania's usury laws to transactions with Pennsylvanians put TitleMax in "no different position than an in-state lender."1
Read that list against your own operation. Filing a UCC-1 is the direct analogue of recording a lien. Debiting a merchant's account daily is collecting payments from residents. Texting a borrower about a missed remittance is communicating in-state. Sending a recovery agent after titled equipment is repossessing collateral there.1 A remote-origination model does not produce a remote-servicing footprint.
Why does two circuits saying it matter more than one?
Because it removes the venue lottery. TMX Finance Corporate Services, a TitleMax affiliate, filed its own constitutional challenge to the same Pennsylvania order to show cause in the Northern District of Texas in August 2024. On January 9, 2026, the Fifth Circuit affirmed dismissal on the same Younger reasoning.6 Seven months later the Fourth Circuit did the same thing in South Carolina.1
Two different circuits, two different home forums, one state regulator, same answer. The strategy of filing where you are comfortable to enjoin a state proceeding you do not like now has a losing record in both places it was tried.4 That does not make the underlying constitutional arguments wrong, and TitleMax can still press them; it makes the forum in which they get heard Pennsylvania's, on Pennsylvania's schedule, with the penalty exposure accruing while it happens.
Does the company have history a credit committee should know?
Yes, and it is procedural rather than reputational. This is a nine-year campaign, not a new dispute. Pennsylvania issued its first investigative subpoena in 2017; there was litigation over that subpoena; only then did the Department open the formal enforcement proceeding, and it issued a second investigative subpoena in 2024.1 TitleMax entities have now lost three times in the federal appellate courts trying to get out from under it. The Third Circuit ruled against an affiliate on the substance in 2022.1 9 The Fifth Circuit rejected a parallel challenge on January 9, 2026, in No. 24-11087, brought by TMX Finance Corporate Services in the Northern District of Texas on the theory that it is a separate entity that does not itself lend.6 7 8 The Fourth Circuit is the third.
State the posture precisely, because none of this is a finding against TitleMax on the merits. The 5,270 counts, the 720% figure, and the $52.7 million are what Pennsylvania has alleged and requested in its order to show cause; no tribunal has adjudicated them, and TitleMax is entitled to contest every one.1 What the three appellate decisions establish is narrower and, for planning purposes, more useful: where that contest happens, and that a regulator nine years into an investigation is unlikely to lose interest.
How does this fit the wider fight over whose law applies?
There are three doors out of a state's rate and licensing regime, and this year has produced a ruling on each. Door one is the true-lender defense, arguing a partner bank is the real lender. That door held in May, when a California court rejected the DFPI's true-lender theory against OppFi because FinWise Bank controlled underwriting, funded the loans, and bore the risk of loss.10 Door two is buying a charter and taking federal preemption with it, which is what the OppFi and Enova acquisitions we covered in July are about, and which is being fought at the application gate rather than in court.11
Door three is the geographic one: originate somewhere permissive, serve borrowers everywhere, and if a state objects, go to federal court. That is the door the Fourth and Fifth Circuits just closed, and it was always the cheapest of the three. It required no bank partner, no acquisition, and no capital. It required only a favorable state of incorporation and a willingness to litigate venue. What is left standing is the expensive version: a real partner-bank structure that survives the three-part control test, or an actual charter.
What should operators do this quarter?
Map your servicing footprint by state, not your origination footprint. That map, not your licensing map, is the exposure surface these decisions describe.
Ask counsel one narrow question. Not "are we licensed," but "if a regulator in each of these states opened an administrative proceeding tomorrow, in which forum would we be litigating it." After these two decisions the honest answer for most cross-border books is: theirs.
Price the timeline, not just the outcome. Pennsylvania issued its first subpoena in 2017. The order to show cause followed years of discovery, and the merits still have not been reached.1 A proceeding you cannot remove to a friendlier court is a multi-year carrying cost regardless of who eventually wins.
Our Opinion
The interesting thing about this decision is how boring the legal question was. Younger abstention is settled doctrine from 1971. Nothing about it was designed for cross-border consumer lending, and the Fourth Circuit did not stretch it. It simply applied the three factors and found them met.
That is the signal worth taking. The industry has treated the whose-law-applies fight as a frontier question, to be settled by novel true-lender theories, charter applications, and preemption arguments. Meanwhile the most common escape route was closed by one of the least exotic doctrines in federal procedure, twice in under eight months, with no circuit split to tee anything up for the Supreme Court.
For an alternative-finance audience the read is not that rate caps are coming for commercial credit. They are not, and this case does not say they are. The read is that geographic structuring is a weaker shield than it looks, and that the weakness has nothing to do with the merits of your rate. You can be entirely right that a state's usury law should not reach your product and still spend four years arguing it in that state's tribunal because you filed a lien and sent a recovery agent there.
Watch two markers into year-end: whether TitleMax seeks Supreme Court review on the abstention question now that two circuits have lined up, and whether any other state banking department copies Pennsylvania's sequence of subpoena, multi-year investigation, then a per-loan-count penalty demand. The per-count arithmetic is the quiet threat here. Nobody prices $10,000 per contract until somebody multiplies it by 5,270.
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Sources
1 CourtListener | TitleMax of South Carolina, Inc. v. Spicher, No. 25-2027 (4th Cir. Aug. 5, 2026), published opinion (PDF)
2 Justia | TitleMax of South Carolina, Inc. v. Spicher, No. 25-2027 (4th Cir. 2026)
3 South Carolina Lawyers Weekly | 4th Circuit affirms dismissal of TitleMax federal suit challenging Pennsylvania enforcement (August 13, 2026)
4 Law360 | TitleMax Rebuffed In 4th Circ. Bid To Halt Pa. Usury Case
5 JD Supra | Fourth Circuit affirms dismissal of title lender's challenge to Pennsylvania usury enforcement
6 ABA Banking Journal | Fifth Circuit affirms dismissal of TMX Finance Corp's lawsuit challenging Pennsylvania interest-rate cap enforcement
7 CourtListener | Oral argument audio, TMX Finance v. Spicher, No. 24-11087 (5th Cir.)
8 PacerMonitor | TMX Finance Corporate Services Inc. v. Spicher, No. 3:24-cv-02054 (N.D. Tex.)
9 Justia | TitleMax of Delaware, Inc. v. Weissmann, No. 21-1020 (3d Cir. 2022)
10 Consumer Finance Monitor | California court rejects DFPI true-lender theory against OppFi (May 29, 2026)
11 Beyond Banks | State AGs Move to Block OnDeck, Bitty Bank Deals (July 21, 2026)
12 American Banker | Nonbank lender finds niche in airport concession business (August 31, 2026)
13 PPC Land | Experian puts credit card offers inside ChatGPT through partner lenders (August 27, 2026)
14 Investing.com | Goldman Sachs sees stable credit trends in direct lending sector (August 31, 2026)
