More than $5.5 million was required to settle the Federal Trade Commission’s charges against Consumer Portfolio Services, a California-based auto lender the agency said used illegal tactics and harassed consumers.

According to the FTC, CPS violated multiple federal statutes including the Fair Debt Collection Practices Act, the Fair Credit Reporting Act’s Furnisher Rule, and Section 5 of the Federal Trade Commission Act. The company misrepresented fees owed by customers and unilaterally modified contracts, failed to disclose the effects of a loan extension to borrowers, and made false statements that CPS audits verified the balances of consumer accounts. In addition, the company disclosed the existence of debts to third parties, it deceptively manipulated Caller IDs when contacting borrowers, it called borrowers at work when not permitted, and it repeatedly called with the intent to harass.

To settle the FTC Act violations, CPS agreed to refund or adjust more than $3.5 million to 128,000 consumer accounts and forebear collections on another 35,000 accounts. It paid an additional $2 million in civil penalties for violations of the FDCPA and FCRA’s Furnisher Rule.

The company also promised to update its practices and procedures to comply with the federal statutes and to establish and maintain a comprehensive data integrity program that will “ensure the accuracy, integrity and completeness of CPS’ loan servicing processes, and the data and other information that CPS services, collects or sells.”

To read the complaint and stipulated order in United States v. Consumer Portfolio Services, click here

Why it matters: The FTC once again made it clear that loan servicers can’t charge consumers more than they owe without risking substantial penalties.