Tower Loan has faced a Tower Loan class action lawsuit brought by Mississippi borrowers that ended in a court-approved $6.62 million settlement, along with earlier federal enforcement by the FTC over the same underlying practice: packing credit-related insurance into consumer loans without proper disclosure. A separate proposed class settlement was defeated, and the company has also been the subject of employment and regulatory actions. Here is what the record shows.
Smith v. Tower Loan: The $6.62 Million Settlement
The main class action against the company was Claudia Smith, et al. v. Tower Loan of Mississippi Inc., et al., Case No. 1:98-CV-212-BrR in the Southern District of Mississippi. Borrowers alleged Tower packed credit life, credit disability, and property insurance into loans; violated a prior FTC consent decree on insurance disclosures; charged insurance premiums above customary rates in violation of Mississippi law; and made false or misleading statements about loan availability, costs, and collateral.1U.S. Court of Appeals for the Fifth Circuit. Smith v. Tower Loan of Mississippi Inc., No. 03-60339
The class covered people who borrowed from Tower Loan of Mississippi between February 15, 1993, and September 1, 2001.2Public Citizen. Crystian et al. v. Tower Loan
Under the approved settlement, the class received $6.62 million, averaging $62.27 per member. Class counsel received up to $900,000 in fees. Tower Loan agreed to change its lending practices for five years, after which it was permitted to resume the challenged conduct.2Public Citizen. Crystian et al. v. Tower Loan
Why Class Members Couldn’t Opt Out
The class was certified as mandatory and non-opt-out under Federal Rule of Civil Procedure 23(b)(1)(A). Members could not leave to file their own suits.2Public Citizen. Crystian et al. v. Tower Loan
More than 1,200 class members objected and sought to opt out. Public Citizen, representing hundreds of them, argued it was unlawful to deny people the right to leave a class action involving routine consumer claims for money damages. On March 16, 2004, the Fifth Circuit affirmed both the settlement approval and the mandatory certification, citing the risk of inconsistent rulings and the fact that many individual claims would likely have been barred by statutes of limitations or forced into arbitration if pursued alone. The U.S. Supreme Court declined to hear the case.1U.S. Court of Appeals for the Fifth Circuit. Smith v. Tower Loan of Mississippi Inc., No. 03-603392Public Citizen. Crystian et al. v. Tower Loan
The FTC Enforcement Behind the Class Claims
The insurance packing and disclosure claims in Smith tracked a federal enforcement history that predated the class action. In July 1990, the FTC charged Tower Loan of Mississippi, Inc. with violating the Truth in Lending Act and Regulation Z by failing to include the costs of mandatory credit-related insurance in loan disclosures. A February 1992 consent order required Tower to offer customers from the prior two years the chance to cancel that insurance and receive refunds or credits.3Federal Trade Commission. Mississippi Loan Company Agrees to Settle Charges Violating Previous FTC Order
The FTC later found Tower had miscalculated the redress amounts and filed a compliance report that inaccurately described its methods. On February 5, 1997, the Department of Justice filed a complaint on the FTC’s behalf in the Southern District of Mississippi alleging Tower had violated the 1992 order. Tower agreed to pay $240,000 in consumer redress and a $100,000 civil penalty. The consent decree was for settlement purposes and did not constitute an admission of wrongdoing.3Federal Trade Commission. Mississippi Loan Company Agrees to Settle Charges Violating Previous FTC Order
Jones v. Tower Loan: A Class Settlement That Was Defeated
An earlier proposed class action, Jones v. Tower Loan of Mississippi, Inc., Docket 2:96-CV-63 in the Southern District of Mississippi, produced a very different outcome. The proposed settlement would have created another mandatory, non-opt-out class, but offered no money to most class members. It did guarantee payment to class counsel: up to $100,000 if approved, or $50,000 if rejected.4Public Justice. Jones v. Tower Loan of Mississippi, Inc.
Public Justice challenged the settlement, arguing inadequate representation and noting that the same class counsel had earlier moved to dismiss the case entirely because it “would not settle” before proposing terms that benefited only lawyers. The settlement was defeated.4Public Justice. Jones v. Tower Loan of Mississippi, Inc.
A Tower Loan Case That Isn’t a Class Action: Broussard
Anyone researching Tower Loan lawsuits will encounter Broussard v. Tower Loan. It is not a class action. Tristan Broussard, a transgender man hired as a Manager Trainee at the Lake Charles, Louisiana branch in 2015, alleged he was fired during his first week after refusing to sign a document stating that his “preference to act and dress as male” did not comply with company personnel policies.5National Center for Lesbian Rights. Broussard v. Tower Loan The federal district court sent the dispute to arbitration.6CaseMine. Tristan Broussard v. First Tower Loan, LLC, Civil Action No. 15-1161
In late 2016, the arbitrator ruled that Tower Loan had discriminated against Broussard “because of his sex” in violation of Title VII and awarded him $53,000. A parallel EEOC suit was resolved through an 18-month consent decree requiring Tower Loan to prohibit discrimination based on transgender status and gender identity, train managers and employees, and provide guidance on complaints involving gender identity and sex stereotyping.7EEOC. First Tower Loan Settles EEOC Sex Discrimination Suit
Recent Litigation and Regulatory Action
Tower Loan’s recent court appearances have often come as a plaintiff enforcing loan contracts. In 15 consolidated cases decided by the Louisiana Second Circuit Court of Appeal in May 2025, the company appealed default judgments in which a district judge had unilaterally reduced the principal and interest Tower Loan was owed. In one case, a borrower owed $6,077.35 on a loan with a 30.56% APR, and the trial judge had crossed out the contractual rate and handwritten “legal” interest.8FindLaw. First Tower Loan LLC v. Combs Another loan of roughly $1,099 carried a contractual rate of 35.99%.9FindLaw. First Tower Loan LLC v. Combs (Consolidated)
The appellate court sided with Tower Loan across the board, ruling that the district court lacked authority to disregard the company’s verified affidavits or to award interest rates different from those in the loan agreements. The court noted the contractual rates were within Louisiana law, which permits up to 36% interest per year on the first $1,400 of a consumer loan.10Louisiana Second Circuit Court of Appeal. First Tower Loan LLC v. Martin, No. 56,237-CA
Separately, Tower Loan of Illinois LLC entered into a settlement with the Illinois Department of Financial and Professional Regulation related to citations from a Consumer Installment Loan Act annual examination, per the agency’s July 2025 enforcement report. The report did not publicly detail the settlement terms.11Illinois DFPR. Enforcement Actions