CFPB Blog: Stop overcharging car loan add-ons | Sheppard Mullin Richter & Hampton LLP
On May 2, the CFPB published a blog post demonstrating its commitment to “a fair, transparent and competitive auto loan market” by drawing attention to the complementary products for which auto dealers and finance companies “often charge to consumers all payments for any additions”. -on lump sum products at the origin of the car loan, and they generally include the cost of the lump sum as part of the total vehicle finance agreement. CFPB reviewers focused on how managers handle these add-on product fees when the loan ends before the potential benefits of the add-on product end.
The CFPB notes that its recent Oversight Highlights Reports indicate that examiners found repairers engaged in unfair practices by failing to seek reimbursement from third-party administrators for “unearned” costs after the consumer was no longer in possession of the vehicle. Reviewers have also found that some repairers engage in unfair acts or practices by miscalculating extended warranty products or other product refunds after repossession and attempting to collect incorrectly calculated deficiency balances.
Put into practice : This blog post represents the latest in a series of public warnings from the CFPB that it is closely monitoring the conduct of the auto industry, particularly with regard to ensuring affordable credit, maintenance and compliant collection and fair competition (we recently discussed the CFPB’s latest look at auto finance companies in previous blog posts here and here). Auto finance companies should be aware of these warnings and consider taking steps to implement some of the best practices in this blog before they are subject to supervisory review or enforcement action.