Auto Lender Required to Pay $60 Million for CFPA and FCRA Violations
The CFPB recently issued a Consent Order against one of the nation’s largest indirect auto lenders, requiring the company to pay $48 million in consumer redress and a $12 million civil money penalty. According to the CFPB, the company allegedly operated an illegal scheme to prevent borrowers from cancelling product bundles that increased their monthly car loan payments. The CFPB also stated that the company falsely reported to credit reporting agencies that customers had missed their monthly payments and it failed to promptly correct credit reporting errors.
The Order alleges that the company’s practices violated FCRA and the CFPA’s UDAAP provisions. According to the CFPB, the company’s alleged violations include:
- Making it unreasonably difficult for consumers to cancel unwanted add-on products and services;
- Failing to ensure consumers received refunds of payments that they had made for certain add-ons that had become void and worthless;
- Failing to provide refunds owed to consumers who canceled their vehicle service agreements;
- Failing to promptly correct negative information it furnished to consumer reporting agencies; and
- Failing to maintain reasonable policies and procedures to ensure payment information it furnished to consumer reporting agencies was accurate.
In addition to paying $60 million in consumer redress and penalties, the company is required to make certain changes to its cancellation and refund procedures and must provide enhanced disclosures to consumers regarding add-on products. Among other things, the company is also prohibited from tying employee compensation or performance measurements to consumers’ retention of bundled products.
