On July 9, 2024, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a national bank, resolving allegations related to the bank’s auto lending practices.
The consent order related to auto lending practices resolves allegations that the bank’s practices related to force-placed insurance policies violated the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536; the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s-2; and the Electronic Fund Transfer Act (EFTA), 15 U.S.C. § 1693e(b) and Regulation E, 12 C.F.R. § 1005.10. Specifically, the CFPB alleged that the bank took out and retained these insurance policies – meant to protect a lender’s interest in the loan’s physical collateral – on vehicles for which borrowers already had their own, separate insurance. According the Consent Order, around 50% of the loans on which the bank force-placed insurance fell into this category. These policies, the cost of which were passed along to the consumer, resulted in increased repossessions, which the CFPB accused the bank of underreporting as well. The CFPB also alleged that the bank failed to provide adequate disclosures around and notice of such force-placed policies to affected consumers.
Under the terms of this consent order, the bank has agreed to pay a civil monetary penalty of $5 million and provide redress to allegedly harmed customers. This consent order was announced jointly with the CFPB’s proposed judgment against this bank in a separate lawsuit stemming from allegations that it improperly opened unauthorized consumer accounts.
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