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CFPB Takes Action Against Auto Seller
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.”