In the runup to the Consumer Financial Protection Bureau’s launch, much was made of how auto dealers abused our service members and veterans.
On March 22, the CFPB released a report, “Servicemembers 2015: A Year in Review.” It shows, as prior reports have, that dealerships and auto loans are far, far down on the list of financial issues that service members complain about.
The CFPB received over 19,000 complaints from the military community in 2015, up from more than 17,000 in 2014. Almost half of those complaints -- 46 percent -- were about debt collection.
Some of those were complaints about collection tactics by auto lenders. In October, the agency brought an action against Ohio’s Security National Automotive Acceptance Co. for engaging in unfair, deceptive and abusive acts or practices. Security National was ordered to refund or credit $2.28 million to service members and others who were allegedly harmed and to pay a penalty of $1 million.
But that’s a lender after the fact, not a dealership.
In general, auto loans fell in the “consumer loan” category, which accounted for about 1,400 complaints, or 7 percent of the total.
The report had this to say about auto loans:
“Due to the nature of the military lifestyle, servicemembers frequently report unique struggles with their auto loans. We have heard from servicemembers who, after receiving orders to move overseas, discovered their loan contract did not allow them to take their car out of the country. Consumers express frustration over having to pay to store their car at home or deal with selling their car while they are gone. They were often completely unaware of this restriction when they took out the loan.”
Excuse me, but this isn’t entirely the dealership’s fault.
If you’re on active duty, you know that you could be shipped out at any time. Isn’t it your responsibility to make sure you’re ready to act on those orders when they come?
To be sure, the F&I manager at a dealership near a military base darn well better be aware of which loan contracts could be restrictive to their military customers. Putting service members in loans that could come back to bite them is just plain dumb. Ever heard of word-of-mouth?
But that said, the latest CFPB report really shows that dealerships aren’t the problem they were painted to be.