Subprime Auto Loan Company Settles Allegations It Turned Blind Eye To Shady Car Dealers

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  • Massachusetts AG Maura Healey reached a settlement with subprime automobile finance company United Auto Credit Corporation (“UACC”) to resolve allegations that it facilitated the sale of defective vehicles and forced some consumers to sign Voluntary Surrender Agreements with broad release language in violation of Massachusetts’s consumer protection laws.
  • According to the assurance of discontinuance, the AG’s office found that UACC had dealer agreements with two car dealerships that routinely sold defective or inoperable cars to consumers. UACC allegedly bought retail installment sales contracts from the dealerships, despite having knowledge about these dealerships’ practices, and failed to ensure that the dealerships were meeting the standards of the Dealer Agreements with respect to the cars they sold. In addition, UACC allegedly required some consumers to sign a Voluntary Surrender Agreement that waived all recourse against UACC while continuing to pursue judgments against consumers with deficiency balances after repossession.
  • Under the terms of the assurance of discontinuance, UACC will pay $250,000 to the AG’s office, which may be used to compensate consumers for ascertainable losses. UACC will also waive any uncollected deficiency obligations on consumer accounts and release all liens on cars purchased from the two dealerships named in the assurance of discontinuance as well as forgive all deficiencies for consumers who signed a Voluntary Surrender Agreement at an expected cost of $550,000. Additionally, UACC will implement new debt collection practices and will formalize its processes and procedures for internal reviews of dealerships, among other things.

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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