WASHINGTON — The federal Consumer Financial Protection Bureau announced Santander Consumer USA Inc. will pay $11.8 million to settle charges the finance source misled car buyers who purchased Santander’s S-GUARD GAP product and opted into its Temporary Reduction in Payment Plan (TRIPP), which offered term-extending, interest-only payments and was marketed “aggressively,” according to a CFPB statement.
“Santander also failed to properly disclose the impact on consumers of obtaining a loan extension, including by not clearly and prominently disclosing that the additional interest accrued during the extension period would be paid before any payments to principal when the consumer resumed making payments,” according to the bureau’s consent order.
More than 10% of Santander-financed customers are said to have enrolled in TRIPP within a year of closing their deals; approximately 70% of the company’s 2.7 million U.S. customers belong to the subprime lending tier. The Dallas-based finance source was accused of failing to properly describe the terms of the program and how it would affect the total cost of each customer’s auto loan.
The settlement includes $9.29 million in restitution and $2.5 million in fines. In a statement released yesterday, Santander’s directors appeared ready to move forward; the company was not compelled to admit guilt to settle the charges.
“We are pleased to put this matter behind us,” the statement read, in part. “Strengthening compliance and consumer practices has been a key focus of ours.”