This story appeared in Bank Digest.
U.S. Bank and its nonbank partner, Dealers' Financial Services, have been ordered to return approximately $6.5 million to servicemembers following a deceptive practices determination by the Consumer Financial Protection Bureau. According to the bureau, the companies developed a joint program that engaged in deceptive marketing and lending practices in violation of the Truth in Lending Act and the Dodd-Frank Act while providing subprime auto loans to tens of thousands of active-duty military members.
The Military Installment Loans and Educational Services (MILES) auto loans program misrepresented the true costs and coverage of add-on products financed along with the auto loans, according to the CFPB. The MILES program required servicemembers to repay their auto loans using the military allotment system, which deducts payments directly from a military member's paycheck, without properly disclosing all associated fees and the way the program worked. The examination also found that the MILES program deceived servicemembers by understating the cost and scope of certain add-on products, such as a service contract, marketed and sold in connection with the loans.
"The CFPB has a special mission to protect servicemembers," stated CFPB Director Richard Cordray. "We will continue our work to ensure that servicemembers are treated fairly."
• CFPB release.
• U.S. Bank National Association Consent Order.
• U.S. Bank National Association Stipulation and Consent to the Issuance of a Consent Order.
• Dealers' Financial Services, LLC, Consent Order.
• Dealers' Financial Services, LLC, Stipulation and Consent to the Issuance of a Consent Order.
• CFPB Enforcement Director Kent Markus blog.
• Cordray remarks.