The CFPB announced this week that it has entered into a consent order with a Colorado buy-here pay-here car dealer to settle charges of sales and advertising practices that violate the Truth in Lending Act (TILA) and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act’s (Dodd-Frank Act) prohibition of Unfair, Deceptive, and Abusive Acts or Practices (UDAAP). According to the Consent Order, the dealer violated the TILA and Dodd-Frank Act by failing to include certain costs and markups in the disclosed finance charge and APR figures, advertising inaccurately low APRs, and failing to post the purchase price on all automobiles when offering financing. The CFPB found that luring consumers with misleading advertisements and misrepresenting the true cost of financing due to inaccurate finance charges and APRs constituted Abusive practices.
The Consent Order requires the dealer to pay $700,000 in restitution, imposes a civil penalty of $100,000, and requires the dealer clearly and prominently posts purchase prices on all automobiles available for sale. Although this enforcement action was limited to an automobile dealer, the same principals apply to the greater consumer lending industry and it further demonstrates the importance of ensuring that advertised and disclosed figures accurately represent the costs consumers will incur in any given financial transaction.