Nissan captive enters $5M consent order with CFPB
The Consumer Financial Protection Bureau issued a consent order in the auto-finance industry for the second time in less than a month; this time with Nissan’s captive.
According to a news release distributed on Tuesday, the bureau said it found several violations by Nissan Motor Acceptance Corp. (NMAC) in connection with vehicle repossessions, including:
— Wrongfully repossessed vehicles
— Kept personal property in consumers’ repossessed vehicles until consumers paid a storage fee
— Deprived consumers paying by phone of the ability to select payment options with significantly lower fees
— In its contract extension agreements, made a deceptive statement that appeared to limit consumers’ bankruptcy protections.
Officials said these actions violated the Consumer Financial Protection Act’s (CFPA) prohibition against unfair and deceptive acts and practices.
The CFPB explained the consent order requires NMAC to provide up to $1 million of cash redress to consumers subject to a wrongful repossession, credit any outstanding account charges associated with a wrongful repossession, and to pay a civil money penalty of $4 million.
The order also imposes certain requirements to prevent future violations and remediate consumers whose vehicles are wrongfully repossessed going forward.
When contacted by SubPrime Auto Finance News, NMAC offered this statement about the matter:
“Nissan Motor Acceptance Corporation (NMAC) has reached a voluntary agreement with the Consumer Financial Protection Bureau (CFPB) regarding claims of unfair and deceptive practices. NMAC denies any wrongdoing but has agreed to settle with the CFPB in the best interest for all parties. While NMAC disagrees with the CFPB’s claims, we take their assertions seriously and share their commitment to fair practices for all our customers. The actions NMAC will voluntarily take under this agreement are intended to further that commitment and to provide appropriate relief for affected customers.”
The bureau went into more detail about its findings that led to this consent order that arrived on the heels of an agreement with Lobel Financial. The order also is the largest since the CFPB’s consent order totaling nearly $12 million with Santander Consumer USA in November 2018.
The CFPB said it specifically found that from 2013 through September of 2019, NMAC repossessed hundreds of consumers’ vehicles despite the consumer having made payments or otherwise taken actions that should have prevented the repossession.
The bureau said it also found that from at least early 2014 through late August 2017, NMAC’s repossession agents with the captive’s knowledge, demanded that consumers pay a separate, upfront storage fee for personal property contained in repossessed vehicles. These agents refused to return consumers’ personal property until the consumers paid the fee, according to the regulator.
The CFPB went on to say that it further discovered that from 2012 through part of 2017, Nissan deprived consumers paying by phone of the ability to select pay-by-phone options with significantly lower fees. Officials said numerous consumers paid $7.95 more to make a phone payment than they would have if they had known of and selected a different payment option.
The bureau also found that when NMAC agreed to modify a consumer’s installment payments for tens of thousands of accounts that NMAC used agreements or written confirmations that included language that created the net misimpression that consumers could not file for bankruptcy.
The CPFB indicated that the consent order requires NMAC to refund fees paid by consumers, credit any outstanding charges stemming from the repossession, and pay consumers redress for each day the captive wrongfully held the vehicle.
NMAC an must also pay a civil money penalty of $4 million.
The consent order also requires NMAC to:
— Prohibit its repossession agents from charging personal property fees to consumers directly and from demanding fees as a condition of returning personal property
— Correct its repossession practices and conduct a quarterly review to discover and remediate any future wrongful repossessions
— Clearly disclose to consumers the fee for each method of making a payment by phone before consumers are asked which method they wish to use
— Stop using any language that creates the impression that consumers have surrendered their bankruptcy rights
The entire consent order can be found on this website.