Santander bank. Photo: Photocritical/Shutterstock.comThirty-four states, including Connecticut, California, Florida, New Jersey, New York and Pennsylvania, have reached a $550 million settlement with automotive financing company Santander Consumer USA Inc. to reimburse consumers for alleged deceptive loan practices nationwide.
The multistate agreement with the nation’s largest subprime auto financing company calls on the Dallas, Texas-based business to follow certain provisions, including knowing a customer’s ability to repay their loans. It also prohibits the company from purchasing loans, if it knows consumers would have little or no money left after paying for housing and other expenses.
The settlement provides California with the bulk of the money, about $99 million for consumers in that state. New York will receive $27 million; New Jersey about $3.1 million; Florida about $7.7 million; Pennsylvania about $14.7 million, and $391,222 for Connecticut’s consumers.
The settlement was good news for prosecutors in several states.
“For years, Santander put Connecticut borrowers at financial risk,” Connecticut Attorney General William Tong said in a statement. “This settlement includes significant loan relief for customers as well as injunctive measures to assure that this kind of behavior won’t happen again.”
New York Attorney General Letitia James wrote in a statement: “As New Yorkers continue to struggle from the financial impact of the coronavirus, we have stopped this company from continuing its fraudulent practices and have helped keep more than $27 million in the pockets of New Yorkers. Santander defrauded desperate consumers by placing them into auto loans the company knew these customers could never afford to pay, resulting in defaults and negative ratings on consumers’ credit reports.”
And California Attorney General Xavier Becerra said in a statement: “Santander profited by approving high-cost loans to disadvantaged auto buyers who were doomed from the start. These predatory loan practices have hurt countless families who are being hit hard by today’s economic climate. This settlement should be a warning to the industry that we are committed to protecting consumers from abusive business practices.”
In California, for example, the press release from Becerra’s office states that, with regard to his state, “Consumers with the lowest quality loans who had defaulted as of Dec. 31, 2019 and have not had their cars repossessed, will be allowed to keep their cars.”
No one from Santander’s media relations team responded to a request for comment Wednesday.
In February 2018, Connecticut and Santander reached a $2.9 million settlement over repossessed cars. In that case, the settlement money was used to credit, waive or refund the accounts of nearly 4,000 Connecticut consumers whose vehicles were repossessed. The company also agreed to pay a $100,000 fine.
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