34 States Reach Settlement With Santander Consumer USA

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Arkansas Attorney General Leslie Rutledge announced Tuesday a settlement with Santander Consumer USA Inc. that includes nearly $30 million in direct payments and debt relief for more than 13,000 Arkansas consumers.

Arkansas’ portion is part of a $550 million settlement that 34 attorneys general reached with the company over allegations that it violated consumer protection laws by knowingly placing subprime consumers into high-risk auto loans.

“Santander’s predatory actions targeted Arkansans for high risk auto loans, and now it will pay handsomely for its deceptive practices,” Rutledge said in a news release. “The standards set by this settlement should serve as a warning to other bad actors who take advantage of financially vulnerable Arkansans: we will do the fighting for consumers and there will be severe consequences for illegal actions.”

States began investigating Santander in March 2015, ultimately determining that Santander, the largest subprime auto financing company in the country, used credit-scoring models designed to target consumers who were likely to default and subsequently failed to acknowledge dealer-falsified income amounts on consumer loan applications. 

Under the settlement, Santander will pay $65 million to the states for consumer restitution and will waive up to $433 million for consumers who still owe on their loans.

The company must also cease extending loans to consumers with negative available incomes and monitor loan applications for false income reporting. Santander must also stop requiring dealers to sell vehicle service contracts and other products, and it will maintain policies and procedures for deferments, forbearances, modifications and other collection matters.