In a move to bridge significant data gaps identified through its February 2023 Auto Finance Data Pilot where it sent information requests to nine large auto lenders about their lending portfolios, the Consumer Financial Protection Bureau is requesting comments for the collection of additional auto financing data. As with its prior requests, the Bureau is issuing these orders under its market monitoring authority which allows it to “gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers.” 12 U.S.C. C. § 5512(c)(1) & (4). Compliance with the requests is mandatory.Continue Reading CFPB Ramps Up Auto Finance Scrutiny: A Look at the New Data Collection Initiative

On October 24, the FTC and the Wisconsin Department of Justice (DOJ) announced a $1.1 million settlement with a group of Wisconsin auto dealers for allegedly charging customers illegal junk fees and unlawfully discriminating against American Indian customers. The action was brought under the FTC Act, the Equal Credit Opportunity Act (ECOA), the Wisconsin Deceptive Trade Practices Act, and the Wisconsin Consumer Act.Continue Reading FTC and Wisconsin DOJ Agree to $1.1M Settlement with Auto Dealers over Unlawful Junk Fees and Discrimination Against American Indian Customers

On August 2, the CFPB filed a lawsuit in Georgia federal court against an auto-loan servicer alleging that the company engaged in various illegal practices that harmed consumers with auto loans. The auto-loan servicer offered both Guaranteed Asset Protection (“GAP”) and collateral-protection insurance, which are products that consumers can buy when they buy or lease a car.Continue Reading CFPB Sues Auto-Loan Servicer for Allegedly Harming Consumers

On February 23, the CFPB issued market-monitoring orders to nine large auto lenders to provide information about their auto lending portfolios. According to the CFPB, auto finance market has seen significant change in recent years, resulting in larger loan amounts and higher monthly payments for consumers. As part of monitoring the auto loan market for consumer risks, the CFPB is collecting auto lending data, and issued these orders to the auto lenders to provide certain information about their lending portfolios as part of collecting such data.Continue Reading CFPB Provides Guidance on Auto Finance Data Pilot

On February 2, the Massachusetts Attorney General announced that her office entered into an assurance of discontinuance with an auto loan provider to settle allegations of certain illegal auto loan collection practices. Specifically, the Massachusetts AG alleged that, beginning in 2017 and continuing to the present day, the auto loan provider allegedly failed to give borrowers adequate information relating to the calculation methods for deficiencies left on their auto loans after their vehicles were repossessed. The Massachusetts AG further alleged that the auto loan provider engaged in a pattern of excessive collection calling to borrowers in violation state debt collection regulations, which prohibit the initiation of more than two collection communications during a seven-day period.Continue Reading Massachusetts AG Settles Enforcement Action Against Auto Lender

On January 4, the Colorado Attorney General announced that his office entered into assurances of discontinuance (available here and here) with two credit unions that will result in $4 million being refunded to Colorado borrowers who were entitled to refunds of guaranteed automobile protection (“GAP”) fees. These settlements follow an investigation by the Consumer Protection Section of the Colorado Department of Law, which found that the credit unions historically failed to refund unearned GAP fees owed to consumers.Continue Reading Colorado AG Secures Latest Settlement over Unearned GAP Fees

On January 4, the CFPB and the New York State Office of the Attorney General filed a complaint against a prominent subprime auto lender in the Southern District of New York. The complaint alleges that the auto lender misrepresented costs in loan agreements and tricked customers into high-cost loans on used cars in violation of the CFPA and New York usury limits. Specifically, the complaint alleges that the auto lender harmed consumers in the following ways:Continue Reading CFPB and New York AG File Suit Against “Predatory” Auto Lender

On July 29, the CFPB and DOJ issued a joint letter to the auto lending and leasing industry reminding auto companies of their obligations under the Servicemembers Civil Relief Act (SCRA). The SCRA affords special protections to servicemembers and their dependents against unfair or predatory practices by auto lenders, including:
Continue Reading Regulators Remind Auto Industry of Servicemember Protections

On June 23, the FTC proposed a rule that would prohibit junk fees, bait-and-switch advertising, and other deceptive practices by auto dealers to protect consumers and honest dealers in the car-buying process. The proposed measures would:
Continue Reading FTC Targets Junk Fees, Bait-and-Switch Advertising by Auto Dealers

On May 2, the CFPB published a blog post demonstrating its commitment to “a fair, transparent, and competitive auto lending market” by calling attention to add-on products for which auto dealers and finance companies “often charge consumers all payments for any add-on products as a lump sum at origination of the auto loan, and they generally include the lump sum cost as part of the total vehicle financing agreement.”  CFPB examiners have focused on how servicers manage these add-on product charges when the loan ends prior to when the add-on product’s potential benefits end.
Continue Reading CFPB Blog: Stop Overcharging for Auto Loan Add-on Products

On March 31, the FTC and Illinois State Attorney General announced a settlement of charges against a large, multistate auto dealer that allegedly discriminated against black consumers and included illegal junk fees for unwanted “add-ons” in customers’ bills.
Continue Reading FTC Imposes Record-Setting $10M Fine Against Multistate Auto Dealer, Settling Charges of Racial Discrimination and Unauthorized Charges