WASHINGTON -- The U.S. Consumer Financial Protection Bureau has received 1,585 complaints about vehicle financing since last March, according to data released by the agency today.
Auto loans prompt 1,585 complaints to new U.S. consumer watchdog
Grievances represent tiny share of finance deals; 19% win relief
A total of 309 of these complaints about loans and leases were settled with some form of relief for the consumer. In 105 cases, it was monetary compensation.
These complaints represent a tiny share of the 30 million new- and used-auto financing transactions that take place every year, according to the National Automobile Dealers Association.
Still, the first release of CFPB data on vehicle-finance complaints is another sign of the bureau's ambitious push to police the auto lending world. Car dealerships are exempt from the Dodd-Frank financial reform law that created the CFPB in July 2011, except for buy-here, pay-here dealers.
But the bureau has already threatened to sue several banks over claims that auto lending practices have led to higher interest rates for ethnic minorities, and that has an immediate effect on dealerships.
"By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services," CFPB Director Richard Cordray said at a field hearing in Des Moines, Iowa, today. "The database is good for consumers and it is also good for honest businesses."
Some of the complaints about loans concerned matters such as late fees, repossession of vehicles, changes after a deal has been closed, payments for trade-in vehicles, high-pressure sales tactics, and misleading advertising, according to a report that the CFPB also released today.
According to the database, there are 31 complaints that have not yet been answered. Another 974 complaints were closed with an explanation, while 186 were closed "without relief" and 83 were closed with no indication of the outcome.
There were 354 cases where the consumer disputed the lender's response to the complaint.
The auto lenders that have prompted the most complaints since March 1, 2012, were Wells Fargo, with 329; Santander Consumer USA, with 166; Capital One, with 157; JPMorgan Chase, with 130, and Ally Financial, with 112. Wells Fargo is the largest auto lender nationwide, with a market share around 6 percent. The other four also rank in the top 10, according to Experian Automotive.
Spokespersons for Wells Fargo and Santander weren't immediately available for comment. Ally declined to comment.
The lending arms of Toyota, Honda and Ford, which also rank among the 10 largest auto lenders nationwide, had 27, 28 and 21 complaints, respectively.
Details on the individual complaints are not available for privacy reasons, according to the CFPB, which serves as an intermediary between consumers and finance companies but does not negotiate on behalf of either.
Despite that, the risk of drawing attention from the new bureau may be a deterrent to lenders, supporters of the CFPB say.
Kathleen Day, a spokeswoman for the Center for Responsible Lending, said she has heard anecdotally "that there have been some very quick resolutions [of complaints] because banks don't want to be on this list."
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.