On October 28, 2015, the Consumer Financial Protection Bureau (CFPB) filed an administrative order against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers.
In June 2015, the CFPB filed a lawsuit against SNAAC, which alleged SNAAC engaged in illegal debt collection practices. Specifically, the complaint alleged that when servicemembers defaulted on their auto loans, SNAAC would:
- Exaggerate the potential impacts of the delinquency, including telling consumers that if they fail to pay it could result in action under the Uniform Code of Military Justice and other adverse career consequences
- Threaten to contact the servicemembers’ commanding officers
- Threaten to garnish the servicemembers’ wages, even though such garnishment could not be commenced without first obtaining a judgment
- Threaten to take legal action against the servicemembers, even when the company had not yet decided to take any action
Pursuant to the administrative order, SNAAC is required to:
- Identify affected consumers and provide them with credits and refunds in the approximate amount of $2.28 million, with each affected consumer receiving relief in the amount of the debt they were unlawfully pressured into paying
- Stop threating to contact servicemembers’ commanding officers
- Stop telling servicemembers that their loan defaults constitute a violation of military law
- Stop telling consumers that the company is taking legal action unless it intends to take such action
- Stop telling consumers that the company will garnish the consumers’ wages unless the company first obtains a judgment permitting such garnishment
- Pay a civil penalty in the amount of $1 million to the CFPB’s Civil Penalty Fund
The CFPB’s enforcement action against SNAAC highlights that debt collection and auto lending practices remain CFPB priorities.
View the CFPB’s administrative consent order here: http://files.consumerfinance.gov/f/201510_cfpb_consent-order-administrative-snaac.pdf.
View the CFPB’s federal district court complaint here: http://files.consumerfinance.gov/f/201506_cfpb_complaint-security-national-automotive-acceptance-company.pdf.
View the CFPB’s federal district court’s Stipulated Final Judgment and Order here: http://files.consumerfinance.gov/f/201510_cfpb_consent-order-district-snaac.pdf.