Consumer redress of more than $1.3 million to 4,000 harmed consumers – and a $100,000 civil money penalty (CMP) – are portions of a settlement reached with an auto-loan servicer charged with engaging in unfair practices, the federal consumer financial protection agency said Monday.
In a release, the Consumer Financial Protection Bureau (CFPB) said the settlement with Lobel Financial Corp. of Anaheim, Calif., was related to charges that the company’s loss damage waiver (LDW) product was in violation of the Consumer Financial Protection Act (CFPA). According to the CFPB, Lobel billed certain consumers for LDW coverage but then failed to provide it and assessed fees from consumers that they were not obligated to pay.
In addition to the redress and CMP, the bureau said, Lobel is also prohibited from failing to provide consumers with LDW coverage or similar products or services for which it has charged consumers or from charging consumers fees that are not authorized by its LDW contracts.
CFPB said its investigation found that, since 2012, Lobel charged customers LDW premiums after they had become ten-days delinquent on their auto loans but did not provide them with LDW coverage. “When these customers needed repairs or experienced total vehicle losses, Lobel denied their claims,” CFPB charged. “This practice was unfair under the CFPA because consumers were charged for a service that they did not receive.”
The agency also said it found that Lobel charged some customers LDW-related fees that Lobel had not disclosed in its LDW contract. This practice was also unfair under the CFPA, CFPB charged.