CFPB Takes Action Against Servicemember Auto Lender Security National Automotive Acceptance Company
On October 28, 2015, the Consumer Financial Protection Bureau (CFPB) filed an administrative order against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers.
In June 2015, the CFPB filed a lawsuit against SNAAC, which alleged SNAAC engaged in illegal debt collection practices. Specifically, the complaint alleged that when servicemembers defaulted on their auto loans, SNAAC would:
The CFPB’s enforcement action against SNAAC highlights that debt collection and auto lending practices remain CFPB priorities.
View the CFPB’s administrative consent order here: http://files.consumerfinance.gov/f/201510_cfpb_consent-order-administrative-snaac.pdf.
View the CFPB’s federal district court complaint here: http://files.consumerfinance.gov/f/201506_cfpb_complaint-security-national-automotive-acceptance-company.pdf.
View the CFPB’s federal district court’s Stipulated Final Judgment and Order here: http://files.consumerfinance.gov/f/201510_cfpb_consent-order-district-snaac.pdf.
CFPB Wins Symbolic Default Judgment Against Corinthian Colleges, Inc.
On October 27, 2015, at the request of the Consumer Financial Protection Bureau (CFPB), the United States District Court for the Northern District of Illinois Eastern Division entered a default judgment against Corinthian Colleges, Inc., in the amount of $530 million.
In September 2014, the CFPB filed a complaint against Corinthian Colleges, Inc., alleging that Corinthian “lured tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services.” In addition, the CFPB alleged that Corinthian engaged in illegal debt collection practices by trying to “strong-arm” students into paying back loans while the students were still in school.
In May 2014, Corinthian filed for bankruptcy and its assets were liquidated. As a result, the default judgment against Corinthian is largely symbolic as it will be unable to pay the judgment. Nevertheless, the CFPB’s willingness to pursue the default judgment is a sign that student loan-related consumer complaints as well as debt collection practices remain priorities for the CFPB. Indeed, the CFPB has issued numerous statements this year indicating its concern about student loan-related services and products and its intent to “halt harmful practices and boost assistance for distressed borrowers.” In addition, the CFPB has initiated numerous enforcement actions related to debt collection practices. As a result, companies should ensure that their student lending and debt collection practices are in compliance with CFPB’s expectations.
View the default judgment against Corinthian Colleges, Inc., here: http://files.consumerfinance.gov/f/201510_cfpb_default-judgment-and-order-corinthian.pdf.
View the CFPB’s September 29, 2015, press release announcing concerns about student loan servicing and frameworks for reform here: http://www.consumerfinance.gov/newsroom/cfpb-concerned-about-widespread-servicing-failures-reported-by-student-loan-borrowers/.
View CFPB Director Richard Cordray’s May 14, 2015 prepared remarks on student loans here: http://www.consumerfinance.gov/newsroom/prepared-remarks-of-cfpb-director-richard-cordray-at-the-field-hearing-on-student-loans/.