CFPB Issues Consent Order Against Auto Lender for Fee and Interest Practices | Weiner Brodsky Kider PC
The CFPB recently issued a consent order against an auto loan finance company for illegally charging customers interest on late payments of its damages waiver fees without their knowledge. The CFPB found that between 2016 and 2021, the company violated the Consumer Financial Protection Act of 2010 (CFPA), 12 USC §§ 5531 (c), 5536 (a) by engaging in unfair acts or practices.
The company, which manages subprime auto loans issued by auto dealers and later awarded to the auto finance group, demanded that its customers agree that if they did not have insufficient insurance coverage for their customers. cars, the company would add a “damage and damage waiver”. coverage to their accounts. This coverage, paid monthly, would cover the cancellation of the customer’s debt in the event of total loss of the vehicle or the cost of a repair.
The order requires the company to provide $ 565,813 in consumer assistance to more than 5,000 aggrieved customers, correct the credit records of aggrieved customers and pay a civil fine of $ 50,000. The ordinance also prohibits the company from charging interest on late payments without disclosing costs, and imposes compliance reporting and record-keeping requirements.
The company has neither admitted nor denied any finding of fact or finding of law, except with respect to jurisdiction.