CFPB’s Alarming Findings: U.S. Auto Sales Loan Servicer cost customers millions of dollars

For a number of illegal actions that injured people with auto loans, the Consumer Financial Protection Bureau (CNPB) filed a complaint in federal court against the auto-loan servicer USASF Servicing (USASF). These actions include:

• Wrongfully disabling their vehicles
• Double invoicing borrowers for insurance fees
• Improperly reclaiming automobiles from borrowers
• Neglecting to reimburse customers for millions of dollars in refunds

The CFPB claims that USASF Servicing, a division of Auto Sales, double-billed for collateral protection insurance, failed to reimburse customers for unused GAP payments, and improperly impounded or activated kill switches on customers’ vehicles. Even when consumers were not in late payments, the auto loan servicer remotely activated devices that blocked cars from starting.

The Consumer Financial Protection Bureau wants to prohibit any further violations from the auto-loan servicer USASF Servicing (USASF). Therefore, CFPB is demanding compensation for customers, and collect civil money penalties.

A car loan servicer with its main office in Lawrenceville, Georgia, is called USASF. A subsidiary of USASF, U.S. vehicle Sales, Inc., a buy-here-pay-here vehicle dealer and lender with 31 dealerships in the Southeast, handled auto loans that were initiated by those businesses.

Guaranteed Asset Protection and Collateral Protection Insurance are products that customers can purchase when they buy or lease an automobile, respectively, from USASF. Auto Sales closed down the majority of its companies in April 2023.

Disabling Vehicles Illegally

Auto lenders frequently demand that vehicles have GPS-enabled devices installed, which allow the lender or servicer to stop a borrower from starting the vehicle. These gadgets are also referred to as “kill switches” or “starter interrupters.” During times when the customer was neither in default nor in contact with USASF regarding forthcoming payments, USASF wrongly disabled vehicles more than 7,000 times and set off warning tones in vehicles at least 70,000 times. USASF at least 1,500 times remotely deactivated autos while specifically guaranteeing consumers it wouldn’t.

Consumer’s Premiums were not Refunded

According to the CFPB, USASF offered customers Guaranteed Asset Protection, which helps bridge the financial gap between what a borrower owes on their auto loan and what their auto insurance will pay in the event that their automobile is stolen, totaled, or suffers other damage. Customers were entitled to refunds of any Guaranteed Asset Protection premiums paid in advance for periods when they would no longer have coverage when they paid off their loans early or USASF repossessed an automobile and charged off an account. Millions of dollars in reimbursements from the Guaranteed Asset Protection administrator were not won by USASF.

Double Billing Customers and Improperly Applied Payments

The CFPB asserts that USASF: Charged clients for the same collateral-protection coverage when they were enrolled via a USASF affiliate. Every billing cycle, in some cases for almost a year, 34,000 customers were double-charged for the insurance, costing them millions of dollars. Additionally, USASF incorrectly assigned additional loan payments made by customers first to late fees or collateral-protection insurance rather than to accumulated interest. Consumers paid over a million dollars in interest and fees as a result of USASF’s incorrect application of their payments, which they would not have had to.

Illegally Seized Vehicles

Some customers who were never eligible for repossession or who took efforts to block the repossession had their automobiles improperly repossessed by USASF. Sometimes USASF would sell the vehicles it had unjustly seized.

Consumers can contact about financial products complaints or services by visiting the CFPB’s website or by dialling (855) 411-CFPB (2372).

Employees of businesses are urged to email information about any violations of federal consumer finance regulations they may be aware of to [email protected].

Reference: consumerfinance.gov.