CFPB and DOJ Send Clear Message Regarding Servicemembers to the Auto Industry 

Cadwalader, Wickersham & Taft LLP
Contact

Cadwalader, Wickersham & Taft LLP

Following the Consumer Financial Protection Bureau’s supervisory observations that the auto finance industry seemed to be struggling with providing adequate consumer protections to servicemembers, the CFPB has joined with the Department of Justice to reach out directly to auto finance companies, emphasizing the importance of compliance with the Servicemembers Civil Relief Act ("SCRA"). While the DOJ is responsible for enforcing the SCRA, the CFPB provides support in terms of educating consumers and industry on how to comply with it, and may use its unfair, deceptive or abusive act or practice authority under the Consumer Financial Protection Act to itself address the failure to comply with the SCRA.

In the letter that was sent to a variety of auto finance and leasing companies, including banks, the industry was reminded that the protections of the SCRA extend not just to servicemembers but also to their dependents. Specifically, when companies undertake to repossess a vehicle, they have the burden of identifying whether a borrower is protected under the SCRA. In addition, the SCRA allows protected borrowers to terminate leases early, without penalty, as well as to reduce interest rates to 6% while the servicemember is in active duty. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cadwalader, Wickersham & Taft LLP | Attorney Advertising

Written by:

Cadwalader, Wickersham & Taft LLP
Contact
more
less

Cadwalader, Wickersham & Taft LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.