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CFPB Fines Servicemember Auto Lender for Violating Consent Order

Mon 01 May, 2017  /  by McIntyre & Lemon  /   Client Alerts

05/01/17—The Consumer Financial Protection Bureau (CFPB) has taken action against an auto lender specializing in loans to servicemembers, for violating a Bureau consent order.

The Ohio-based auto-finance company operates in more than two dozen states and specializes in loans to servicemembers, primarily to buy used vehicles. In June 2015, the CFPB sued the lender for aggressive collection tactics against consumers who fell behind on their loans.

In 2015, the CFPB ordered the lender to pay both redress and a civil penalty for illegal debt collection tactics, including making threats to contact servicemembers’ commanding officers about debts and exaggerating the consequences of not paying. The lender violated the 2015 order by failing to provide more than $1 million in refunds and credits, affecting more than 1,000 consumers. The order required the company to pay $2.275 million in consumer redress through credits and refunds, and a $1 million civil penalty. Consumers with an account balance were to receive credits to their accounts, and consumers with a zero balance were to receive cash refunds. While the defendant submitted two plans that claimed to provide the full amount of redress ordered, both were designed to underpay such redress.

In the new consent order, the CFPB found that the company had failed to meet its obligation to pay redress to consumers by issuing worthless “credits” to settled-in-full accounts, issuing worthless “credits” to discharged accounts, and failing to properly give redress to consumers making payments under settlement agreements.

The consent order requires the defendant to make good on the redress it owes to those consumers and pay an additional $1.25 million penalty.

CFPB Press Release, Consent Order.