Auto lender to military service members must pay $1.25M penalty

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Auto lender to military service members must pay $1.25M penalty

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Photo by Amy Rollins

The federal Consumer Financial Protection Bureau has taken action against an Ohio auto lender to pay refunds and credits the federal agency says were due to hundreds of consumers, and pay an additional $1.25 million penalty, records show.

The CFPB alleged Mason-headquartered Security National Automotive Acceptance Corp., which specializes in vehicle loans to military service members, violated a consent order the federal agency issued in October 2015.

“It’s important that the CFPB is staying on the case and making sure that the service members that were harmed get their due,” said Lauren Saunders, associate director of the National Consumer Law Center in Washington, D.C.

Under the consent order, SNAAC was ordered to pay more than $2.2 million to consumers and a $1 million civil penalty, federal records show. Of the amount due, the company was accused of failing to pay more than $1.1 million in a combination of refunds and credits, impacting more than 1,000 consumers, and of using “unlawful” collection tactics that targeted delinquent consumers, documents show.

The tactics included threats to contact and contacting a service member’s commander, and warning of consequences to a service member’s career under military law if delinquent debts were not paid, among other claims, a consent order and federal court records show.

SNAAC said the company agreed to a settlement with the CFPB to resolve a disagreement over the interpretation of part of the 2015 consent order “and move forward in serving customers in the honorable manner that has been the company’s tradition,” a statement said. Part of the dispute centered on the value of credits and their distribution to some of those consumers.

“The CFPB acknowledges in the settlement agreement that ‘SNAAC has consented’ to the order ‘without admitting’ its findings,” the company statement said.

“SNAAC is proud of its work over the past 30 years for its customers, many of whom would not have had access to the credit they and their families need,” the statement added.

The 2015 consent order covered about 2,200 accounts of more than 83,000 the company processed between 2011 to 2015, the company said.

“Although SNAAC disagreed with the CFPB’s interpretation of the 2015 Consent Order, the company offered to pay all the disputed amounts in order to move forward,” the statement said. “The CFPB declined the offer and began an inquiry. SNAAC cooperated fully and responded quickly to all requests for data, reports and testimony.”

The CFPB had filed a lawsuit against SNAAC in June 2015 in federal District Court in Ohio, which ordered the company to refrain from contacting anyone who was not a party to a consumer’s loan agreement. The CFPB’s administrative consent order dealt with refunds and credits issued to consumers, records show.

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