CFPB Fines National Dealer Group, DriveTime, $8 Million

The Consumer Financial Protection Bureau has officially gone after a dealer group. We reported previously that the CFPB targeted Ally Bank and sought to “level the playing field,” when it comes to auto loans. However, in late November, they took aim at DriveTime. The “Buy Here Pay Here” dealer group has 123 stores nationwide.

The group must now pay some $8,000,000 as a “civil money penalty.” An official press release by the CFPB indicates that DriveTime is being punished for, “making harassing debt collection calls and providing inaccurate credit information to credit reporting agencies.” They are also required to, “end its unfair debt collection tactics, fix its credit reporting practices, and arrange for harmed consumers to obtain free credit reports.” The question is, what are unfair debt collection tactics? Why is the CFPB going after a dealer group? Could this be the start of a trend by this bureau to target other dealers in the future?

On the decision to go after a dealer group, Richard Cordray, the Director of the CFPB said, “DriveTime harassed and harmed countless consumers, many of whom were economically vulnerable. Our action today forces DriveTime to pay the price for its illegal debt collection tactics and for neglecting the accuracy of consumers’ credit information.” Those tactics included contacting delinquent borrowers at work, contacting the references from their credit application (presumably) to get a hold of them and furnishing what was called inaccurate information to credit reporting agencies. This decision on the part of the CFPB obviously reflects several points for which the bureau is troubled by. However, the biggest take away for dealers, especially those who are not “buy here pay here,” is that this new government agency targeted a dealer group, not a large auto lender.

When the CFPB was created under the Dodd Frank Wall Street Reform Act of 2010, dealerships were exempted. It was determined that they were “main street,” and not “wall street.” Since that time, it seems that auto lending has been a target of the CFPB, and now they were able to target a specific dealer group. The question is whether or not the exemption that dealers received when this organization was created will stand the test of time, or fade as the CFPB comes after more dealers? Do you think that the government will target dealers more and more?