CFPB Files Complaint Against Auto Loan Servicer

On August 2, 2023, the CFPB announced that it had filed a complaint against a Georgia-based auto-loan servicer alleging “unfair acts and practices in violation of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1).”

The complaint, filed in United States District Court for the Northern District of Georgia, alleges that the servicer violated the CFPA by “wrongfully activating starter-interruption devices to disable consumers’ vehicles and activate warning alerts” and wrongfully repossessing vehicles, among other conduct. Specifically, the CFPB alleges that the servicer erroneously activated starter-interruption devices to disable vehicles 7,500 times contrary to company policy, for consumers who were not delinquent or had agreed to make payments.  The CFPB also alleges that the servicer sent “warning tones” through the starter-interruption devices “71,000 times to consumers who had made a payment or were not in default.”

The complaint also alleges that the servicer failed to refund “Guaranteed Asset Protection” premiums to consumers who were entitled to them after their vehicles were repossessed, and that the servicer double-billed consumers for “Collateral-protection insurance” and failed to promptly correct the erroneous bills. Additionally, the CFPB claims that the servicer misapplied extra payments from consumers by first applying payments to late fees or add-on premiums instead of accrued interest. Finally, the CFPB alleges that the servicer wrongfully repossessed consumer vehicles because it did not have a process in place for initiating repossession-hold requests for consumers who were entitled to them.

The CFPB alleges that these practices were “unfair” and therefore violated 12 U.S.C. § 5536(a)(1)(B). The CFPB requests unspecified consumer relief “including but not limited to rescission or reformation of contracts, the refund of moneys paid, restitution, disgorgement, or compensation from unjust enrichment, and payment of damages.”  Additionally, the complaint seeks injunctive relief, unspecified civil monetary penalties, and costs.​