OCTOBER RESEARCH STORE Already a subscriber? LOG IN
AddControlToContainer_DynamicNavigation6

CFPB orders provider to buy, write off accounts

Add This Email A Friend Printer Friendly Version Increase Text Size Decrease Text Size
0 comments
Consumer Protection
Tuesday, November 27, 2018

Charged with a misrepresenting certain costs and limitations associated with its add-on insurance product, a financial services provider reached a settlement with the Consumer Financial Protection Bureau (CFPB) involving a relatively complex restitution plan requiring the company to acquire or write off of certain customer accounts affected by the company’s actions.

Dallas-based Santander Consumer USA Inc. was said to violate the Consumer Financial Protection Act by failing to properly explain aspects of its S-GUARD GAP product, which a consumer could elect to purchase to cover the “gap” between their primary auto insurance payout and their outstanding auto loan balance if their vehicle were totaled. 

The bureau claimed Santander did not adequately describe the benefits and limitations of the product nor did it properly disclose the consumer impact of obtaining a loan extension. Specifically, the bureau’s consent order stated the company failed to clearly and prominently state that the additional interest accrued during the extension period would be paid before any payments to principal when the consumer resumed making payments.

The consent order details how a lack of certain details, as well as inaccuracies, in scripts used by customer service representatives led to charges of deceptive acts or practices.

“Respondent’s customer call representatives did not disclose how principal and interest would be allocated in payments following the extension period,” the consent order states. “Respondent’s customer call representatives told consumers that payments, once resumed at the end of the extension period, would remain the same as before.

“Respondent’s scripts for offering extensions stated that ‘interest would continue to accrue,’ but respondent failed to explain to consumers when that interest would be paid or that the interest accrued during the extension period would have to be paid off in full before the consumer would be able to pay down any principal, resulting in slower principal reduction and more interest paid, even if the consumer made timely payments, over the life of the loan,” the order continued.

Additionally, the order also states that Santander’s representatives failed to explain to customers considering whether to enroll for a loan extension that doing so would result in additional interest costs over the life of the loan. 

“Respondent’s call representatives told consumers that interest continued to accrue during the extension and that the loan maturity date would be extended, which likely created the misimpression that the interest would not be paid immediately upon a consumer’s next scheduled payment,” the order states. “In fact, the next payment the consumer made would first be applied to the interest accrued on the unpaid amount financed from the date respondent last received a payment from the consumer.”

The company has been ordered to pay $9.29 million in restitution to certain consumers who purchased the add-on product, a $2.5 million civil money penalty and to clearly and prominently disclose the terms of its loan extensions and the add-on product.

The bureau also has directed Santander to write off any accounts with outstanding balances belonging to customers who bought the add-on product. Santander also must credit all accounts, open or closed, (which the company has not charged off) as having a zero balance. The company then must verify with credit agencies that the accounts are paid in full or closed with a zero balance.

Santander also must attempt to acquire affected customers’ accounts which it sold to third party collectors and securitizers to apply statement credits. If the company cannot acquire an account, it instead has to provide the customer a certified or bank check for $100.

All details about the restitution plan must be spelled out to affected customers.

Today's other top stories
FDIC: Lower taxes help banks continue record profits
OIG examines common CFPB supervisory approach
OIG to FDIC: Improve cybersecurity oversight
Luetkemeyer asks how CECL will affect GSEs
N.C. to redo midterm election amid fraud allegations


COMMENT BOX DISCLAIMER:
October Research is not responsible for the comments posted on its websites by readers. We will do our best to remove comments that include profanity or personal attacks or other inappropriate comments.
Comments:

Be the first to leave a comment.

Leave your comment
CAPTCHA Validation
CAPTCHA
Code:
: 
: 
Your Email is for reporting purposes only. It will NOT be displayed.
Popularity:
This article has been viewed 2190 times.
Host State Loan-to-Deposit Ratios 2016
The Federal Reserve Board, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. have issued information on the host state loan-to-deposit ratios, which are used to determine compliance under Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Review the ratios in Dodd Frank Update’s Library.
Fed, FDIC, OCC, Riegle-Neal

Monthly Newsletter

Dodd Frank Update February 2019

Cover Story:

Overdraft trends reflect massive credit union growth


 
Recent Webinar

Your TRID Questions Answered:
Featuring Richard Horn
With the TRID 2.0 implementation date approaching fast, find out from the expert himself what you not only need to comply, but what some of the other CFPB compliance concerns are as October 1 gets closer.
PUBLICATIONS  |  WEBINARS  |  SPECIAL REPORTS

Tweets from @DoddFrankUpdate/lists/industry-news
News by Topic   News by Agency   News by Industry   News by Title   News by Edition
Banking
Case Law
Consumer Protection
Financial Stability
Industry Spotlight
Legislation
Nonbank Financial
The TRID Journey
 
CFPB NCUA
CFTC OCC
FDIC OFR
FHFA SEC
FRB States
FSOC Treasury
FTC  
 
Appraisal
Broker-Dealer
Community Banks & Credit Unions
Investment Adviser
Land Title
Mortgage
Mining and Manufacturing
Payday Lending
 
Title I Title IX
Title II Title X
Title III Title XI
Title IV Title XII
Title V Title XIII
Title VI Title XIV
Title VII Title XV
Title VIII Title XVI
 
Dodd Frank Update November 2018
Dodd Frank Update December 2018
Dodd Frank Update January 2019
Dodd Frank Update February 2019
Archives

Library   About   Subscribe   Store
The Dodd-Frank Act Position Papers
Dodd-Frank Summary & History Special Reports
Court Actions Legislation
Enforcement Documents Regulations
Guidance Documents Reports, Studies and Surveys
White Papers Federal Register Notices
 
Dodd Frank Update
Contact / Editors
Advertise
Social Media
RSS Feeds
Are You An Expert?
Subscriber Agreement
 
Subscriptions
Free Email Updates
Try a Free Edition
 
Special Reports
Webinars
The Summit (NS3)
Other Newsletters
The Title Report
The Legal Description
Valuation Review
RESPA News
Copyright © 2011-2019 Dodd Frank Update
An October Research, LLC publication
3046 Brecksville Road, Suite D, Richfield, OH 44286
(330) 659-6101, All Rights Reserved
www.doddfrankupdate.com | Privacy Policy
VISIT OUR OTHER WEBSITES
> The Legal Description
> RESPA News
> The Title Report
> Valuation Review
> The October Store


Loading... Loading...
Featuring:
  • Delivery 3X a week plus breaking news as it happens
  • Comprehensive title insurance industry news
  • Recent acquisitions, mergers, real estate stats
  • Exclusive in-depth coverage of the industry's hottest stories
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Comprehensive Dodd-Frank coverage
  • The latest information from the CFPB
  • Full coverage of Congressional hearings
  • Updates on all agency actions
  • Analysis of controversial provisions
  • Release of newest studies and reports
Sign up today and...
  • Be one of the first to know where NS3 is being held
  • Learn about NS3 speakers and sessions
  • Save on registration with Super-Early Bird rates
  • Discover the networking opportunities NS3 offers
  • Find out if CE credits will be offered for your area
  • And much more
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Preview the latest RESPAnews.com Top Story
  • RESPA related headline news
  • Quote of the Week
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Legal, regulatory and legislative information impacting the settlement services industry
  • News from HUD, Congress, state legislatures and other regulatory agencies
  • Follow the lobbying efforts of all the major national real estate services organizations.
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • The industry's only full-time newsroom
  • Relevant, up-to-date appraisal industry news
  • Covering the hottest stories and industry trends
NEWS BY TOPIC
EDITION
AGENCY
INDUSTRY
SPECIAL REPORTS
LIBRARY
WEBINARS
EMAIL UPDATES
ABOUT
SUBSCRIBE
Banking
Case Law
Consumer Protection
Financial Stability
Industry Spotlight
Legislation
Nonbank Financial
The TRID Journey
CFPB
CFTC
FDIC
FHFA
FRB
FSOC
NCUA
OCC
OFR
SEC
States
Treasury
Appraisal
Broker-Dealer
Community Banks & Credit Unions
Investment Adviser
Land Title
Mortgage
Mining and Manufacturing
Payday Lending
2019 State of the Industry
Rethinking Generational Strategies
2018 Mortgage Technology
2018 CFPB Anniversary
Compliance in the New Reg. Env.
Archives
The Dodd-Frank Act
Dodd-Frank Summary
Court Actions
Enforcement Documents
Guidance Documents
White Papers
Position Papers
Legislation
Regulations
Reports, Studies and Surveys
Federal Register Notices
Proposals
Final Rules
GAO
Agency
Contact Us
Advertise
Social Media
RSS Feeds
Are You An Expert?
Subscriber Agreement