In late 2024, the Massachusetts Division of Banks (the “Division”) announced consent orders with four auto finance companies resolving allegations of improper repossession of motor vehicles.
On November 4, 2024, the Division announced that it had entered into a consent order with a motor vehicle sales finance company that also operates as a retail installment sales finance company and a registered third-party loan servicer. Pursuant to the order, the company agreed to issue refunds to consumers whose vehicles were repossessed or who prepaid their accounts for any unearned portion of debt cancellation cover (GAP) premiums. The company also agreed to implement administrative policies and safeguards to ensure that consumers are not being subjected to fees or repossessions without GAP premiums in the future. The company further agreed to pay an administrative penalty of $50,000 to the Division.
On the same day, the Division announced it had entered into consent orders with two separate motor vehicle sales finance companies whose loans were serviced by the aforementioned company as part of their registered third-party loan servicing activities. Pursuant to the consent orders, these companies agreed to ensure that their loans are serviced in compliance with Massachusetts law, with particular focus on compliance for loan servicing and collateral repossession, and issue refunds and consumer reimbursements where necessary. The companies further agreed to each pay a $15,000 administrative penalty to the Division.
On December 31, 2024, the Division announced that it had entered into a consent order with a licensed motor vehicles sales finance company resolving allegations that the company repossessed vehicles without providing borrowers adequate opportunity to cure the default. The consent order followed an indication by the company that it will cease conducting motor vehicle sales finance activities within Massachusetts and will surrenders its Massachusetts license to engage in such activities.
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