TitleMax of Alabama Inc v. Wills

In July 2024, the Supreme Court of Alabama decided TitleMax of Alabama Inc v. Wills. The case arose when Wills, a borrower, filed a putative class action against TitleMax, alleging that its auto title loans violated state pawnshop and usury laws by charging unlawfully high interest rates. TitleMax moved to compel arbitration based on a clause in the loan agreement. The trial court denied the motion, and TitleMax appealed. The Alabama Supreme Court affirmed, holding that the arbitration agreement was unenforceable because it contained a provision that prospectively waived the borrower's right to seek public injunctive relief. The Court concluded that this prohibition violated Alabama public policy, rendering the entire arbitration clause invalid.

The Alabama Supreme Court affirmed the circuit court's order denying TitleMax's motion to compel arbitration, holding the arbitration agreement invalid and unenforceable because it violated Alabama public policy.

Whether a mandatory arbitration provision that prohibits a borrower from seeking public injunctive relief in any forum is unenforceable as a violation of public policy.

The ruling limits the ability of consumer lenders to use arbitration clauses to block borrowers from pursuing public injunctive relief and class actions. It reinforces Alabama's commitment to consumer protection remedies and provides a significant precedent for consumers challenging coercive arbitration terms in financial contracts.