The Consumer Financial Protection Bureau filed a federal lawsuit alleging that auto loan company USASF Servicing incorrectly disabled at least 7,500 vehicles and failed to return millions of dollars in customer refunds.
According to an Aug. 2 lawsuit, Lawrenceville, Ga.-based USASF remotely activated devices that kept cars from starting on at least 1,500 different occasions even when borrowers were either not in default or were in contact with USASF about upcoming payments.
The company allegedly improperly engaged in double-billing by charging approximately 34,000 customers who were already enrolled in collateral-protection coverage through a company affiliate. USASF reportedly illegally repossessed vehicles from customers who didn’t qualify for repossession or had already taken action to prevent it from happening. “In some instances USASF sold the vehicles that it had wrongfully repossessed,” the CFPB stated.
According to the CFPB, the company failed to refund millions of dollars in customer refunds through its Guaranteed Asset Protection program to cover a portion of the gap between the amount a borrower owes on an auto loan and what their car insurance would pay if the vehicle was stolen, damaged or totaled.
“USASF also wrongfully applied consumers’ extra loan payments first to late fees or collateral-protection insurance instead of accrued interest,” the CFPB stated. “This misapplication of payments caused consumers to pay over a million dollars in interest and fees that they would not have paid if USASF had correctly applied their payments.”
A provider of auto loans to customers with low credit scores, USASF serviced loans originated by ‘buy-here-pay-here’ auto dealer and lender U.S. Auto Sales, Inc., which had 31 dealerships in the Southeast before winding down most of its businesses in April.