CFPB Hits Auto Lender With $48.3 Million In Fines And Restitution

This week, the Consumer Financial Protection Bureau (CFPB) hit an indirect auto lender and a subsidiary with $48.3 million in fines and restitution amid accusations of deceptive collection tactics.

The agency claims that Los Angeles-based Westlake Services and auto title lender Wilshire Consumer Credit called consumers under false pretenses and used misleading caller ID information in an effort to collect on debts. The companies also allegedly falsely threatened to refer borrowers for investigation or criminal prosecution and illegally disclosed information about debts to borrowers’ employers, friends and family. These practices violated the Fair Debt Collection Practices Act, the Truth in Lending Act, and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.

Westlake Services is an indirect auto finance company that specializes in purchasing and servicing auto loans, including many subprime and near-subprime loans. Wilshire Consumer Credit, a wholly owned subsidiary of Westlake, offers auto title loans directly to consumers, largely via the Internet, and services those loans. Wilshire also purchases and services auto title loans made by others.

“There’s no excuse for lying to your customers, and today’s action will provide millions of dollars in relief for borrowers caught up in Westlake and Wilshire’s deception,” said CFPB Director Richard Cordray in a press release. “Consumers struggling to pay their bills deserve to be treated with respect, not subjected to illegal threats and deceptive phone calls. We will continue to clean up the debt-collection market and root out these illegal and inexcusable practices.”

The Consumer Financial Protection Bureau said that the companies’ debt collectors altered caller ID information for outgoing calls to make it appear that they were calling from other companies, including repossession firms.

“The companies’ debt collectors would then pretend during the call that they were calling from repossession companies and make explicit or implicit threats that the borrowers’ vehicles were in imminent danger of being repossessed,” the agency wrote.

The CFPB ordered the companies to provide $44.1 million in cash relief and balance reductions to affected customers and pay an additional $4.25 million in civil money penalties.