Auto-Loan Servicer Improperly Imposed Loss Damage Waiver on Customers

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with auto-loan servicer Lobel Financial Corporation (“Lobel”) to resolve allegations that Lobel engaged in unfair practices regarding its Loss Damage Waiver (“LDW”) product, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • According to the consent order, the CFPB found that Lobel improperly added its LDW product, which is not an insurance product, to accounts of customers with insufficient insurance instead of force-placing insurance on their accounts, continued to bill certain consumers for LDW coverage while failing to actually provide the coverage, charged some customers LDW-related fees without disclosing them in its LDW contract, and collected LDW-related fees from customers who were not obligated to pay them.
  • Under the terms of the consent order, among other things, Lobel will pay approximately $1.35 million in consumer redress, a $100,000 civil money penalty, and promulgate a written redress plan.