If you are financing cars, please read the following news release from the CFPB and take a careful look at your practices. Review what we have taught you about the Truth in Lending Act and required disclosures. Don’t be a Herbie!
|FOR IMMEDIATE RELEASE:
January 21, 2016
CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION AGAINST HERBIES AUTO SALES FOR UNLAWFUL LENDING PRACTICES
Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against Herbies Auto Sales, a buy-here pay-here used car dealer, for abusive financing schemes, hiding auto finance charges and misleading consumers. Herbies will pay $700,000 in restitution to harmed consumers, with a suspended civil penalty of $100,000.
“Buying a car is often one of the most important purchases a consumer makes, so the experience needs to be fair and above-board,” said CFPB Director Richard Cordray. “But concealing finance charges and the real cost of credit, as Herbies did here, is unlawful and unacceptable.”
Y King S Corp., which does business as Herbies Auto Sales, is located in Greeley, Colo. Herbies operates as a subprime, buy-here, pay-here dealer, which is a dealer that both sells the car and originates the auto loan without selling that loan to a third party. From at least 2012 through May 2014, the company offered financing to about one thousand people each year.
Herbies unlawfully advertised a misleadingly low 9.99 percent annual percentage rate (APR), without disclosing a required warranty, a payment reminder device and other credit costs as finance charges. This ruse helped Herbies convince consumers that they would get the 9.99 percent APR instead of the much higher rate actually charged. Also, Herbies engaged in abusive practices.
Herbies violated the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. Specifically, the company:
The full text of the CFPB’s Consent Order is available at:http://files.consumerfinance.gov/f/201601_cfpb_consent-order_y-kings-corp-also-doing-business-as-herbies-auto-sales.pdf
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.