CFPB Enters Into $60M Consent Order with Vehicle Lending Credit Corporation

On November 20, 2023, the Consumer Financial Protection Bureau (CFPB​​) announced that it entered into a consent order with the auto-financing arm of a major automaker in the amount of $60 million, resolving allegations that the corporation violated the Fair Credit Reporting Act (FCRA).  Under the order, the corporation will pay $48 million in damages to consumers and a $12 million penalty into the CFPB’s victims relief fund.​

According to the CFPB, the corporation engaged in an illegal scheme to induce customers to purchase optional products and services in bundled packages when purchasing vehicles, which were then added into the customers’ vehicle loan contracts.  Those bundled products, which included Guaranteed Asset Protection (GAP) and Credit Life and Accidental Health (CLAH) coverage, averaged between $700 and $2,500 per loan, significantly increasing customers’ loan amounts, monthly payments, and finance charges over the course of the loans.  The CFPB further alleged that dealers would lie about whether the products were mandatory or simply included them on the customers’ contracts without their knowledge.  The CFPB also alleged that the corporation falsely informed credit reporting bureaus that customers had missed payments and failed to correct credit reporting errors.

To resolve these allegations, the CFPB and the corporation entered into a consent order under which the company agreed to pay $32 million to customers who did not receive refunds for unearned GAP and CLAH payments; nearly $10 million to customers who unsuccessfully tried to cancel GAP and CLAH coverage; and $6 million to customers who were negatively affected by incorrect information which the company allegedly provided to credit reporting agencies.  The company also agreed to pay a $12 million fine in civil penalties to be paid into the CFPB’s victims relief fund.