For an estimated 2 million people every year, the title to their car becomes a pawn in their bid to stay financially afloat—a move that doesn't always work out.

As the Consumer Financial Protection Bureau sorts through public input on its proposal to relax its pending so-called payday-loan rule, which covers auto-title loans, consumer advocates say these arrangements are a debt trap.

While state laws govern auto-title loans, the Dodd-Frank Act of 2010 granted some authority to the bureau (which the legislation also created) to regulate such lenders. Before that, they had largely flown under the radar of federal lawmakers and regulators.

"The CFPB has jurisdiction to a certain extent," said Alan Kaplinsky, a partner at Ballard Spahr and head of the firm's Consumer Financial Services Group. "They can investigate and bring enforcement proceedings against [a title-loan provider] if they feel that they're in violation of any federal consumer law."

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