By Katalina M. Bianco, J.D.
The Consumer Financial Protection Bureau seems to have turned its focus to auto lending recently. In the last week, the CFPB has announced two enforcement actions targeting the industry. The bureau ordered an indirect auto finance company, Westlake Services, LLC, and its auto title lending subsidiary, Wilshire Consumer Credit, LLC, to provide consumers with more than $44 million in cash relief and balance reductions for allegedly using illegal debt collection tactics. According to the consent order, the companies used fake caller ID information, falsely threatened consumers with prosecution, and disclosed information about debts to borrowers’ employers, friends, and family. The companies also were ordered to overhaul their debt collection practices and pay a civil penalty of $4.25 million.
“There’s no excuse for lying to your customers, and today’s action will provide millions of dollars in relief for borrowers caught up in Westlake and Wilshire’s deception,” said CFPB Director Richard Cordray. “Consumers struggling to pay their bills deserve to be treated with respect, not subjected to illegal threats and deceptive phone calls. We will continue to clean up the debt collection market and root out these illegal and inexcusable practices.”
Fifth Third Bank. The CFPB also instituted enforcement actions against Fifth Third Bank over its alleged discriminatory auto loan pricing and illegal credit card practices. In a joint enforcement action, the CFPB and the Department of the Justice are requiring that the bank change its indirect auto lending pricing and compensation system to minimize the risks of discrimination. The auto lending enforcement action is part of a larger joint effort between the CFPB and DOJ to address discrimination in the indirect auto lending market. Most recently, in July 2015, the CFPB and DOJ took an action against American Honda Finance Corporation requiring Honda to pay $24 million in consumer restitution and take the same steps to substantially reduce or eliminate entirely dealer discretion.
The joint enforcement action was the result of a CFPB examination, begun in January 2013, which evaluated Fifth Third’s indirect auto-lending program for compliance with the Equal Credit Opportunity Act and a joint investigation by the bureau and DOJ.
For more information about CFPB enforcement actions and indirect auto lending, subscrbe to the Banking and Finance Law Daily.
