A Connecticut-based automobile finance company settled a claim by the Massachusetts Attorney General’s Office that the finance company facilitated the sale of defective vehicles by a group of Massachusetts car dealerships. As part of the settlement, Sensible Auto Lending LLC has agreed to provide debt relief in the amount of $733,925.
According to the Massachusetts AG, Sensible Auto Lending facilitated the sale of defective or inoperable vehicles when it supplied dealerships with financing, despite knowing that consumers had complained about the dealerships and, further, knowing of high default and repossession rates of financings of vehicles sold by the dealerships. The AG’s Office further found that Sensible Auto Lending failed to detail the cost of specific insurance policies that consumers were required to purchase, in violation of the Massachusetts Cost of Consumer Credit Disclosure Act. The insurance policies, termed vendor single interest (“VSI”) policies, are designed to protect lenders when a vehicle is damaged or deemed a total loss, but the AG determined that Sensible Auto Lending used its VSI claims to recover credit losses. As a result, consumers’ annual percentage rates on their loans exceeded the Massachusetts statutory cap of 21 percent.
The terms of the settlement require Sensible Auto Lending to provide refunds to some of its customers, including those who purchased from certain dealerships, those who complained of mechanical defects with vehicles, and those who lost their vehicles to repossession. In addition, the finance company must also waive all monies owed by the hundreds of consumers who purchased vehicles from other specified dealers. Finally, the settlement agreement compels the lender to track consumer complaints, repossession rates, and delinquency rates of the dealerships with which it partners.
“This settlement will give consumers victimized by these dealerships a clean slate by refunding them for faulty cars and repairing their credit,” said Massachusetts Attorney General Maura Healy in a statement. “Sensible Auto has also changed its business practices so that consumers are protected from fraud in the future.”