Banking and Finance Law Daily CFPB settles with Nissan Motor Acceptance Corp for illegal collections and repossession practices
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Wednesday, October 14, 2020

CFPB settles with Nissan Motor Acceptance Corp for illegal collections and repossession practices

By Nicole D. Prysby, J.D.

Nissan will pay refunds to consumers and a $4 million civil penalty to settle charges that it violated the CFPA by wrongfully repossessing vehicles and charging fees.

On October 13, 2020, the Consumer Financial Protection Bureau announced a settlement with Nissan Motor Acceptance Corporation (Nissan), an auto financing subsidiary of Nissan North America, Inc., which services auto loans and leases originated by Nissan and Infiniti dealerships nationwide. The Bureau issued a consent order against Nissan, finding that Nissan and its agents violated the Consumer Financial Protection Act (CFPA) by wrongfully repossessing vehicles; keeping personal property in consumers’ repossessed vehicles until consumers paid a storage fee; depriving consumers paying by phone of the ability to select payment options with significantly lower fees; and, in its loan extension agreements, making a deceptive statement that appeared to limit consumers’ bankruptcy protections. Nissan will pay consumer refunds of up to $1 million and pay a $4 million civil penalty.

According to the consent order (to which Nissan stipulated), the Bureau found that Nissan repossessed hundreds of consumers’ vehicles despite the consumer having made payments or otherwise taken actions that should have prevented the repossession. For example, Nissan repossessed cars of consumers who had agreed to extension agreements with Nissan or who had made promises to pay by a date that had not yet passed. The Bureau also found that Nissan’s repossession agents, with Nissan’s knowledge, demanded that consumers pay a separate, upfront storage fee for personal property contained in repossessed vehicles. These agents refused to return consumers’ personal property until the consumers paid the fee. The Bureau found that Nissan deprived consumers paying by phone of the ability to select pay-by-phone options with significantly lower fees. Numerous consumers paid $7.95 more to make a phone payment than they would have if they had known of and selected a different payment option. The Bureau also found that when Nissan agreed to modify a consumer’s loan payments, Nissan used agreements or written confirmations that included language that created the misimpression that consumers could not file for bankruptcy.

The Bureau’s consent order requires Nissan to pay between $750,000 and $1,000,000 to refund fees paid by consumers, credit any outstanding charges stemming from the repossession, and pay consumers redress for each day Nissan wrongfully held the car. Nissan must also pay a civil money penalty of $4 million and file a compliance plan. The consent order requires Nissan to prohibit its repossession agents from charging personal property fees to consumers directly and from demanding fees as a condition of returning personal property; to correct its repossession practices and conduct a quarterly review to discover and remediate any future wrongful repossessions; to clearly disclose to consumers the fee for each method of making a payment by phone before consumers are asked which method they wish to use; and to stop using any language that creates the impression that consumers have surrendered their bankruptcy rights.

Companies: Nissan Motor Acceptance Corporation; Nissan North America, Inc.

MainStory: TopStory CFPB EnforcementActions Loans UDAAP

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