Consumer Finance Enforcement Watch

​On March 24, 2017, the Massachusetts Commissioner of Banks (“Commissioner”) entered into a consent order with a licensed motor vehicle sales finance company, agreeing to refrain from further violations of Massachusetts state law governing the conduct of motor vehicle sales financing.  The consent order came after the Commissioner examined the company and subsequently issued a report alleging substantial non-compliance with applicable Massachusetts and federal laws.

The consent order requires the company to cease using starter interrupt devices to automatically disable vehicles prior to the expiration of the borrower’s right to cure period and assessing interest and/or late fees after a repossession of the collateral has been executed; to monitor transaction activity to ensure that any deficiency balance is calculated by deducting the fair market value of the collateral from the unpaid balance on the consumer’s loan; to refrain from pursuing collection of deficiency balances on accounts where the unpaid balance was $2,000 or less at the time of default; and to maintain an effective compliance management system that includes furnishing written progress reports to the Commissioner every month.

The consent order also requires the company to pay an administrative penalty of $90,000 for its improper use of starter interrupt devices, to refund to each consumer any amounts collected after the date of repossession, and to refund to each consumer amounts paid that were more than the balance owed on their loans (after properly calculating the deficiency balance).