Blog Enforcement Watch May 24, 2021

Auto Lender Enters Into Consent Order with CFPB

​On May 21, 2021, the Consumer Financial Protection Bureau (CFPB) announced​ that it ​entered into a consent order​ and stipulation with​ a California-based company that services subprime auto loans originated by car dealers.​

According to the consent order and stipulation, the CFPB ​found that the company engaged in unfair acts or practices by charging interest on late payments related to loss damage waiver fees, without the knowledge or consent of the consume​r, in violation of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(c), 5536(a).  Specifically, the CFPB found that between 2016 and 2021, the company charged $565,813 in interest to roughly 5,800 consumers’ accounts for late payments associated with the fee without disclosing the charge to the account holders.​

Under the consent order, the company will pay a total of $565,813 in consumer relief to 5,782 customers, a $50,000 civil penalty, and cease charging interest on late payments of the loss damage waiver fee without ​disclosing to customers the interest charge and how it accrues.​  Additionally, the company stipulated that the findings alleged in the consent order were true and could have collateral estoppel effect in future proceedings.

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