A federal regulator is suing an auto loan company for using aggressive and illegal debt collection tactics against service members.
The Consumer Financial Protection Bureau (CFPB) alleges that Security National Automotive Acceptance Company, LLC (SNAAC) used a combination of illegal threats and deceptive claims in order to collect debts.
SNAAC is an Ohio-based auto finance company that operates in more than two dozen states and specializes in lending to service members. It lends money primarily to active-duty and former military to buy used motor vehicles.
Both active-duty and former service members could encounter trouble with the company if they missed or were late on payments. The CFPB alleges that the company violated the Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibitions against unfair, deceptive, and abusive acts and practices by using aggressive collection tactics that took advantage of service members' special obligations to remain current on debts.
The company routinely exaggerated the potential impacts on service member's careers if they remained delinquent, including loss of promotion, loss of security clearance or denial of re-enlistment. These consequences, said the agency, were extremely unlikely.
SNAAC also contacted, and threatened to contact, commanding officers to pressure service members into repayment using a provision buried in the fine print of the loan contracts. Many service members, it said, were either unaware of the provision or didn't understand it.
The CFPB claims that SNAAC falsely threatened to garnish service members' wages even though a court judgement must be obtained first. The company would threaten to pursue an involuntary allotment before they had even determined whether the service member would be sued.
SNAAC also threatened to take legal action against borrowers when, in fact, it had not determined whether to take such action. In numerous instances the company did not intend to take such action at the time.
The agency is seeking compensation for harmed service members, a civil penalty, and an order prohibiting the company from committing future violations.