CFPB Takes Action Against Auto Seller

Auto Finance, CFPB, UDAAP
January 21, 2016

On Thursday, January 21, 2016, the CFPB took action against Herbies Auto Sales, a buy-here pay-here used car dealer, for allegedly using abusive financing schemes, hiding auto finance charges and misleading consumers.  

Under the consent order, Herbies is required to pay $700,000 in redress to consumers, with a suspended civil penalty of $100,000.  The company also must stop deceiving consumers during financing process, post automobile prices, and provide certain financing information in advance.

 

Specifically, Herbies allegedly violated the Truth in Lending Act , Dodd-Frank Wall Street Reform and the Consumer Financial Protection Act when it:

 

  • Hid finance charges and advertised a far lower annual percentage rate than consumers received;
  • Hid finance charges stemming from a refusal to negotiate car prices; and
  • Used abusive practices.

 

“Buying a car is often one of the most important purchases a consumer makes, so the experience needs to be fair and above-board,” said Director Cordray.  “But concealing finance charges and the real cost of credit, as Herbies did here, is unlawful and unacceptable.”

Premier Sponsors