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Adam CrowellMar 9, 20232 min read

CFPB Uncovers Illegal Junk Fees on Auto Loans

March 9, 2023.  The Consumer Financial Protection Bureau (CFPB) has uncovered illegal junk fees charged auto loans.

On March 8, 2023, the Consumer Financial Protection Bureau (CFPB) released its findings from a 6-month examination of auto loans.  These auto loans, studied from July 1, 2022 through February 1, 2023, came to the attention of the CFPB as a result of consumer complaints.  The 6-month study found that illegal "junk fees" are being charged to consumers on auto loans.

Specifically, CFPB examiners found the unlawful charging of the following fees on auto loans:

  • Out-of-bounds and fake late fees:  Servicers charged late fees that exceeded the permissible amounts stated in borrowers’ contracts. Servicers also charged late fees to consumers whose vehicles had been repossessed and their loans accelerated, which means that no payment was due that could have been subject to a late fee.
  • Inflated estimated repossession fees:  Servicers, before returning vehicles to some consumers, charged inflated estimated repossession fees of $1,000 when the average cost to repossess a vehicle is only $350.
  • Vehicle repossession and property retrieval fees: Some borrowers were charged repossession fees as well as fees to retrieve personal property found in repossessed vehicles, which sometimes included lifesaving medical equipment. The borrowers’ loan agreements did not allow the lenders to charge these fees.
    Vehicles being repossessed with fees tacked on despite prior payment arrangements: Lenders that repossessed vehicles despite having entered into payment agreements with borrowers to allow them to avoid repossession. When borrowers went to reclaim their vehicles, they were forced to pay repossession fees as well as forced to refinance their debts - a practice which generally adds new costs to the initial loan principal.
  • Pay-to-pay payment fees and kickback payments:  After borrowers were locked into servicer relationships, some auto loan servicers charged payment processing fees for the most common payment methods that far exceeded servicers’ costs for processing payments.  Payment processors collected the inflated fees, and the servicers then profited through kickbacks from the processors.

CFPB Director Rohit Chopra has vowed to fight unlawful and deceptive acts and practices involving the charging of illegal junk fees in auto loans, and recently exclaimed that “[f]or years, junk fees have been creeping across the economy.”

"There are two ways to avoid the crosshairs of regulators like the CFPB, which trigger costly investigations and enforcement actions," said Adam Crowell, President & General Counsel of ComplyNet.  "First, adopt a comprehensive compliance program to avoid issues and complaints to regulators," continued Crowell,  "and second, adopt a comprehensive system for soliciting and resolving consumer complaints that will help analyze and fix practices that arguably unfair or deceptive."

ComplyNet can help your dealership manage consumer complaints with the FAIRSHAKE complaint management system, which enables dealers to review, respond, and manage complaints with one simple tool.

Features Include:

  • FAIRSHAKE Logo/Link on Dealer Website
  • Cloud-Based System to Mitigate Complaints
  • Resolution Tracking
  • Safely Storing Files

To learn more about FAIRSHAKE - CLICK HERE or MEET WITH US.


Adam Crowell

Adam is Vice President of Legal and Corporate Development at KPA and ComplyNet and is a licensed practicing attorney with over 21 years of experience primarily representing dealerships. Adam is a frequent speaker on the local, state, and national levels, including presentations to the National Automobile Dealers Association (NADA), the National Independent Auto Dealers Association (NIADA), and the National Association of Dealer Counsel (NADC).