Nissan Becomes Most Recent Target of CFPB Ire: Auto Finance Company Enters into $4 Million Consent Order for Alleged Unlawful Repossession Acts

Troutman Pepper

Troutman Pepper

On October 13, 2020, the Consumer Financial Protection Bureau (the “CFPB”) announced that it entered into a consent order (the “Order”) with Nissan Motor Acceptance Corporation (“Nissan”) to resolve allegations that the auto finance company violated the Consumer Financial Protection Act (the “Act”. The Order requires Nissan to pay a $4 million penalty and offer $1 million in restitution to affected consumers.

Specifically, the CFPB alleged that Nissan violated the Act in four ways:

  • By repossessing vehicles between 2013 and 2020 even though customers had already made payments or taken action that should have prevented repossession;
  • By requiring customers to pay a $7.95 fee to make payments by telephone and failing to give customers an option to pay by telephone with significantly lower fees;
  • By requiring customers to pay a storage fee to Nissan’s repossession agents for the return of personal property recovered from repossessed vehicles; and
  • By including statements in Nissan’s loan modification agreements that appeared to limit customers’ bankruptcy protections.

The Order imposes a $4 million penalty on the auto finance company and, further, requires Nissan to issue refunds to customers and pay customers for each day Nissan wrongfully withheld vehicles. Nissan also agreed to non-monetary relief as part of the Order. Nissan also agreed to prohibit its repossession agents from charging fees for the return of personal property recovered from repossessed vehicles, to conduct a quarterly review of repossessions, to clearly disclose to consumers the fee for pay-by-phone options, and to refrain from using language in its contracts that suggests consumers have relinquished any rights in bankruptcy.

The Order is the latest in a slew of enforcement actions from the CFPB. In the third quarter of 2020, the CFPB brought 19 public civil and administrative actions, a pace not seen since the CFPB was helmed by Richard Cordray.

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.

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