The Consumer Financial Protection Bureau yesterday announced it has filed a lawsuit against a company that services and collects on auto loans, accusing it of violating the Consumer Financial Protection Act because it allegedly misapplied payments, wrongfully repossessed vehicles, double-billed consumers for insurance, wrongfully activated starter-interrupt devices, and failed to refund premiums to consumers.
A copy of the complaint, filed in the District Court for the Northern District of Georgia against USASF Servicing, can be accessed by clicking here. USASF serviced auto loans originated by U.S. Auto Sales, which operated 31 buy-here-pay-here dealerships in the Southeast United States, which wound down its business earlier this year.
“The CFPB is suing USASF for a range of misconduct, including illegally activating devices that prevented borrowers from starting their cars,” said CFPB Director Rohit Chopra, in a statement. “Given the rising cost of cars during the pandemic and jump in auto loan debt across the country, the CFPB is working to root out illegal activity in this market.”
USASF purportedly disabled vehicles more than 7,500 times when consumers were not in default on their loans or were in communication with the company about upcoming payments, according to the suit. These were a result of programming errors, system miscommunications, and human error, according to the complaint.
The company also allegedly failed to refund millions of dollars in insurance premiums that were pre-paid, and double-billed or misapplied collateral protection coverage that led consumers to pay more than $1 million in additional interest and fees.
Due to a lack of a formal procedure to flag accounts where a possible repossession had been put on hold, the company repossessed dozens of vehicles — even going as far as to have some of those cars sold at auction — from consumers who should not have had their vehicles repossessed, according to the complaint.
The CFPB is seeking financial penalties, in the forms of restitution to consumers and civil fines, as well as working to ensure future violations are prevented.
