Santander affiliate to pay for deceptive practices
The CFPB has settled with Santander Consumer USA Inc., a non-bank consumer financial services company based in Dallas, Texas, for violations of the Consumer Financial Protection Act (part of the Dodd-Frank Act) of 2010. The Bureau found that Santander failed to properly describe the benefits and limitations of its S-GUARD GAP product, which it offered as an add-on to its auto loan products. The Bureau also found that Santander failed to properly disclose the impact on consumers of obtaining a loan extension, including by not clearly and prominently disclosing that the additional interest accrued during the extension period would be paid before any payments to principal when the consumer resumed making payments.
Under the terms of the consent order, Santander must, among other provisions, provide approximately $9.29 million in restitution to certain consumers who purchased the add-on product, clearly and prominently disclose the terms of its loan extensions and the add-on product, and pay a $2.5 million civil money penalty.