CFPB Takes Action Against Auto Finance Company for Debt Collection UDAAP Violation

Yesterday the Consumer Financial Protection Bureau (CFPB) announced it was taking action against a lender that focused on making automobile loans to servicemembers.

The CFPB alleges that Security National Automotive Acceptance Company, LLC, an Ohio based auto finance company, regularly engaged in prohibited, aggressive debt collection tactics against servicemembers and used a combination of illegal threats and deceptive claims in order to collect debts.

In announcing the action CFPB Director Richard Cordray stated: “Security National Automotive Acceptance Company took advantage of military rules to put enormous pressures on servicemembers to pay their debts.  For all the security they provide us, servicemembers should not have their financial and career security threatened by false information from an auto loan company.”

The company operates in more than two dozen states and specializes in lending to servicemembers. It lends money primarily to active-duty and former military to buy used motor vehicles.

The CFPB alleges that the company violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair, deceptive, and abusive acts and practices by using aggressive collection tactics that took advantage of servicemembers’ special obligations to remain current on debts. The CFPB suggests thousands of servicemembers were impacted.

Among the specific allegations in the complaint the CFPB alleges that the company has:

• Exaggerated potential disciplinary action that servicemembers would face
• Contacted and threatened to contact commanding officers to pressure servicemembers into repayment
• Falsely threatened to garnish servicemembers’ wages
• Misled servicemembers about imminent legal action

Through the lawsuit, the CFPB seeks to stop the alleged unlawful practices of the company. They have also requested that the court impose penalties on the company for its conduct and require that compensation be paid to consumers who have been harmed.

As with any lawsuit, the complaint is not a finding that the company has violated any law.  The company has the right to defend itself against the CFPB claims.