The auto-loan servicer allegedly disabled vehicles, improperly repossessed cars, and double charged for insurance premiums on thousands of consumer vehicles.
08/10/2023 11:50 A.M.
2 minute read
Last week, the Consumer Financial Protection Bureau filed a lawsuit against USASF Servicing, an auto-loan servicer based in Lawrenceville, Georgia, alleging a series of detrimental actions that have adversely affected borrowers with auto loans, according to a release from the bureau.
The lawsuit alleges that USASF engaged in multiple harmful practices, including the disabling of vehicles, improper repossession of cars, unauthorized double-billing for insurance premiums, and the failure to reimburse millions of dollars in refunds to consumers.
One of the most shocking allegations is the activation of devices that prevented borrowers from starting their cars. These “kill switches” or “starter interrupters” were remotely engaged over 7,500 times, even when borrowers were not in default or were in communication with the company about upcoming payments. The lawsuit states that this practice was performed at least 1,500 times after explicit assurances to borrowers that it would not happen.
The lawsuit also highlights instances where USASF failed to refund premiums to consumers who were entitled to Guaranteed Asset Protection, a coverage that bridges the gap between the amount owed on an auto loan and the insurance payout in cases of theft, damage, or total loss. Additionally, nearly 34,000 consumers were double charged for insurance each billing cycle, costing them millions of dollars. Moreover, the company applied consumers’ extra loan payments incorrectly, leading to the wrongful accumulation of interest and fees.
USASF Servicing also wrongfully repossessed vehicles from consumers who either did not qualify for repossession or had taken steps to prevent it. Some of these vehicles were subsequently sold by the company.
As auto loans have surged in recent years due to the rising cost of vehicles, the bureau is determined to rectify the wrongful repossessions, credit reporting inaccuracies, and cost misrepresentation that have plagued the industry.
Enforcement Action
Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take enforcement action against institutions that violate federal consumer financial laws, including the CFPA’s prohibition on unfair acts or practices, according to the release.
The CFPB is seeking to obtain consumer redress and civil money penalties, as well as stop any future violations.
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org to receive updates on the ACA Huddle.