On October 1, 2015, the Consumer Financial Protection Bureau (CFPB) announced its second enforcement action in three days against an indirect auto finance company. In its latest action, the CFPB took aim at indirect auto finance company Westlake Services, LLC, and its auto title lending subsidiary, Wilshire Consumer Credit, LLC.
The CFPB consent order alleges that Westlake and Wilshire violated the Fair Debt Collection Practices Act, the Truth in Lending Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act in connection with the companies’ debt collection practices, advertising methods, customer relations, and account servicing practices.

Unlawful Debt Collection Practices

Specifically, the CFPB found that Westlake and Wilshire engaged in deceptive and unfair debt collection practices by

• altering caller ID information to make it appear to consumers that calls were coming from other companies, such as repossession companies, in order to make consumers believe that repossession of their vehicles was imminent unless they paid outstanding debts;
• falsely threatening to refer consumers to law enforcement authorities for investigation or criminal prosecution even when the companies had not yet made such a decision;
• calling consumers whose vehicles had already been repossessed and deceiving them into believing the callers were from a repossession company and that the consumers would get their vehicles back if they paid outstanding debts;
• calling consumers’ employers, friends, and family members and disclosing information about the consumers’ loans and debts without the consumers’ permission; and 
• hiring a vehicle repossession company to call consumers and trick them into believing that repossession was imminent unless they paid outstanding debts, even though such repossession was not imminent.

Other Illegal Practices

In addition to engaging in illegal debt collection practices, the CFPB consent order alleges that Westlake and Wilshire engaged in impermissible advertising, customer relations, and account services by

• deceiving borrowers about the effects of due dates and extensions by failing to contact consumers prior to making changes and, after changes were complete, misrepresenting that the changes were favorable to the consumers; and
• failing to disclose the true cost of loans to consumers by charging certain monthly interest rates and failing to disclose the annual percentage rates.

The consent order requires Westlake and Wilshire to

• pay approximately $44.1 million in restitution: $25.8 million in cash to consumers and the remainder in the form of balance reductions on outstanding loans;
• cease further deceptive and unlawful debt collection practices;
• stop disclosing borrowers’ loan information to third parties or otherwise threatening to disclose such information if doing so would be unlawful;
• evaluate advertisements and ensure they are in compliance with the Truth in Lending Act;
• provide consumers with accurate information about their loans and not extend due dates or loan terms without first explaining the effects of such actions to consumers and obtaining the consumers’ consent to modify loan terms; and
• pay a $4.25 million penalty to the CFPB’s Civil Penalty Fund.

You can view the CFPB’s administrative consent order against Westlake and Wilshire here: http://files.consumerfinance.gov/f/201509_cfpb_consent-order-westlake-services-llc.pdf.

The Westlake/Wilshire consent order is the CFPB’s second enforcement action against an indirect auto finance company in three days. On September 28, 2015, the CFPB and the Department of Justice announced two separate actions against Fifth Third Bank related to the bank’s credit card add-on products and its indirect auto lending practices. You can read more about the Fifth Third Bank enforcement actions here: https://www.stinson.com/Resources/Alerts/2015_Alerts/CFPB_and_DOJ_Take_Action_Against_Fifth_Third_Bank.aspx.