• CFPB Enforcement Action against "Buy-here, Pay-here" Auto Dealer
  • February 17, 2015 | Authors: Peter L. Cockrell; Brett M. Kitt; Gil Rudolph; J. Scott Sheehan
  • Law Firms: Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Washington Office ; Greenberg Traurig, LLP - Houston Office
  • On Nov. 19, the CFPB entered into a consent order with a “buy-here, pay-here” auto dealer to settle allegations of illegal debt collection practices and improper credit reporting practices. In addition to selling vehicles, such dealers also originate, hold and service the financing contract. In the consent order, the CFPB alleges that the auto dealer engaged in the following activities that were unfair and thus in violation of the law:

    • Harassing borrowers at work. The auto dealer’s collection agents called delinquent borrowers at their places of employment and in some circumstances the agents continued to call when asked not to do so.

    • Harassing borrowers’ references. The auto dealer’s collection agents called delinquent borrowers’ references and in some circumstances the agents continued to call the references when asked not to do so.

    • Repeated calls to wrong numbers. The auto dealer’s collection agents attempted to call delinquent borrowers, but would use wrong numbers. In some circumstances the agents continued to call these unrelated third parties when asked not to do so.

    • Failing to accurately report repossession information. In a number of cases, the auto dealer would provide inaccurate information to credit reporting bureaus regarding the dates on which the dealer repossessed cars from delinquent borrowers. The auto dealer also failed to properly address disputes regarding such information when raised by borrowers and further failed to implement reasonable procedures to ensure that such credit information was accurate.

    Under the terms of the consent order, the auto dealer must pay an $8 million civil money penalty, end its unfair debt collection tactics, fix its credit reporting practices, and arrange for harmed consumers to obtain free credit reports.