CFPB and Auto Lender Settle Servicemember Debt Collection Claim for $3.28 Million

Auto Finance  •  CFPA  •  CFPB  •  Debt Collection  •  SCRA

CFPB​On October 28, 2015, the Consumer Financial Protection Bureau (CFPB) announced that it entered an administrative consent order against an Ohio-based auto lender that specializes in loans to military servicemembers.  The CFPB consent order, and the companion stipulated order issued by the U.S. District Court for the Southern District of Ohio, resolve a complaint that was filed in that court on June 17, 2015 alleging that the lender’s debt collection practices violated the Consumer Financial Protection Act (CFPA).  According to the complaint, the auto lender contacted and threatened to contact borrowers’ commanding officers, and made misleading statements about potential legal action and the consequences of delinquency.  The complaint also alleged that many borrowers failed to read the contract addendum authorizing the lender to contact the borrowers’ commanding officers, that borrowers had no ability to negotiate the terms of the addendum, and that borrowers “could not reasonably have anticipated the nature and frequency of the threatened and actual contacts with command.”  The consent order requires the auto lender to pay a civil money penalty of $1 million, provide $2.28 million in consumer redress, cease threatening to contact commanding officers, and stop false threats.

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