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CFPB Orders Servicemember Auto Loan Co. to Pay $3.28M for Illegal Debt Collection Tactics
Thursday, October 29, 2015 6:30 AM

Wednesday, the Consumer Financial Protection Bureau filed an administrative order against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers, for engaging in illegal debt collection practices.

The order requires the company to refund or credit about $2.28 million to servicemembers and other consumers who were allegedly harmed, and pay a penalty of $1 million. A separate court order bans SNAAC from using aggressive tactics, such as exaggeration, deception, and threats to contact commanding officers, to coerce servicemembers into making payments.

SNAAC, LLC is an Ohio-based auto finance company that operates in more than two dozen states and specializes in lending to servicemembers. It lends money primarily to active duty and former military to buy used motor vehicles.

In brief, thousands of people were victims of the company’s aggressive tactics. Specifically, the CFPB alleged that the company:

  • Exaggerated potential disciplinary action that servicemembers would face.
  • Contacted and threatened to contact commanding officers to pressure servicemembers into repayment.
  • Falsely threatened to garnish servicemembers’ wages.
  • Misled servicemembers about imminent legal action.

Pursuant to the Dodd-Frank Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Under the terms of the administrative order filed today and the separate court order, SNAAC will be required to:

Provide about $2.28 million to thousands of harmed servicemembers and other consumers: SNAAC must identify the affected consumers and provide credits or refunds. The amount that each consumer receives will correspond to the amount of debt they were allegedly unlawfully pressured into paying. The company must submit a written plan to the CFPB for approval detailing how the company will identify and provide relief to the thousands of affected consumers.

SNAAC must also end the following practices:

  • Threats to contact commanding officers.
  • Misstatements about potential disciplinary action.
  • End false threats of garnishing wages. 

And the company must pay a civil monetary penalty of $1 million to the CFPB’s Civil Penalty Fund.

SNAAC has neither admitted nor denied the allegations of the complaint.

Read more about this announcement on the CFPB site.