State Attorneys General Settle with National Bank for $575 Million over Auto and Mortgage Lending Practices

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[author: Stephen Shaw]

​On December 28, 2018, the Attorneys General (AGs) of all 50 states and the District of Columbia announced a settlement totaling $575 million with a national bank as the result of a coordinated investigation by the States. The national bank previously entered into consent orders and settlements totaling $1 billion with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau related to the same conduct, as Enforcement Watch previously reported.

The AGs, proceeding under their various state consumer protection laws, alleged that the bank encouraged its employees to enroll consumers into various programs and accounts without their knowledge or consent by employing sales goals and incentives without sufficient oversight. In addition, the state AGs alleged that the bank improperly referred customers for enrollment in third-party renters’ and life insurance policies, improperly charged auto loan customers for duplicative force-placed insurance, failed to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and incorrectly charged customers for mortgage rate lock extension fees.

In addition to the $575 million in payments to the state AGs, the bank has agreed as a result of the settlement to implement a remediation program within 60 days whereby consumers who fell outside the previous restitution program it implemented may contact the bank to be reviewed for potential redress. The bank also agreed to provide periodic updates to the States regarding ongoing restitution efforts.

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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