Our readers may be interested in hearing about what the Consumer Financial Protection Bureau is doing on the enforcement front. Today, the agency issued a press release concerning consent orders against U.S. Bank and one of its affiliates:
Today the Consumer Financial Protection Bureau (CFPB)ordered U.S. Bank and one of its nonbank partner companies, Dealers’
Financial Services (DFS), to end deceptive marketing and lending
practices targeting active-duty military. The two companies must return
about $6.5 million to servicemembers for failing to properly disclose
all the fees charged to participants in the companies’ Military
Installment Loans and Educational Services (MILES) auto loans program,
and for misrepresenting the true cost and coverage of add-on products
financed along with the auto loans.
The orders against the two targets — available here and here — lay out the facts uncovered in the agency's investigation in considerable detail.
The range of remedies agreed to by the two companies are detailed after the jump.
Stop deceptive practices:
U.S. Bank and DFS are required to end deceptive marketing and lending
practices and will be prohibited from making misleading claims or
omissions when marketing add-on products through MILES or similar
programs in the future.
· Pay restitution to servicemembers: U.S.
Bank has agreed to pay at least $3.2 million and DFS has agreed to pay
$3.3 million to over 50,000 servicemember victims for violating the
Truth in Lending Act and federal laws that prohibit deceptive marketing
and lending practices. Servicemembers who had outstanding MILES loans
between January 1, 2010 and today may receive restitution under today’s
orders.
· Provide refunds or credits without any further action by consumers: Servicemembers are not required to take any action to receive their reimbursement. U.S. Bank and DFS will provide the reimbursements to the victims as an account credit or as a check in the mail.
· Stop requiring the use of allotments:
U.S. Bank and DFS have also agreed to modify the MILES program so that
servicemembers are not required to use allotments in order to
participate.
· Improve disclosures:
The companies will take steps to improve their disclosures to
servicemembers regarding the cost and other material terms of add-on
products.
· Required reporting: Under the orders, both
companies will be required to submit a redress plan that the CFPB must
approve. They must also provide reports to the Bureau to demonstrate
their compliance with the orders.
