Consumer Finance Insights
May 1, 2017

CFPB Fines Auto Lender $1.25 Million for Violations of Consent Order

On April 26, 2017, the Consumer Finance Protection Bureau (CFPB) announced that it reached a consent order with an Ohio-based auto lender that allegedly violated a prior CFPB consent order by failing to properly return $1 million in refunds and credits to its customers.  According to the CFPB, the auto lender specializes in auto loans to servicemem​bers.  Under the new order, the auto lender must pay approximately $1.1 million in credits to customers and an additional civil penalty of $1.25 million.

The original consent order was alleged to be a purported unfair, deceptive, and abusive practices that violated sections 1031 and 1036 of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531, 5536.  The original order required the lender to issue refunds or credits to customers affected by the lender’s aggressive debt collection tactics.

According to the new consent order, the CFPB found that the lender failed to comply with the prior order by issuing worthless credits to borrowers, rather than refunds.  The new consent order identified three types of improper credits: 1) credits to customers with fully settled accounts; 2) credits on accounts discharged in bankruptcy, and 3) credits to debtors making payments under settlement agreements.​  The company is to provide proper credits to these consumers in the amount of nearly $1.1 million.

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