The New York City Department of Consumer Affairs, or DCA, said yesterday it had issued subpoenas to Santander Consumer USA, Inc. and Santander Consumer Funding 3 LLC, auto finance. Specifically, the municipal agency is investigating used car dealer financing practices, primarily subprime loans underwritten by lenders such as Santander, and arranged for consumers by New York City used car dealerships.
The DCA licenses 854 used car dealerships citywide.
In a press release, DCA said the inquiry builds on earlier agency investigations that “raised concerns that dealerships may be engaged in illegal predatory practices such as selling expensive and unwanted add-ons and arranging high-interest subprime loans without informing consumers of information they are required to provide so that the consumer can make a smart choice about financing.”
DCA Commissioner Julie Menin said in the release that “DCA is taking an innovative and aggressive approach to investigating used car dealer practices by looking at their relationships with banks. DCA wants to make sure that New Yorkers can purchase used vehicles with confidence, knowing that the car they buy and the loan they use to pay for it are free of any hidden problems.”
DCA’s investigation will examine records of indirect auto loans financed by lenders such as Santander and sold to consumers by New York City used car dealerships from over the past three years.
As part of its investigation, DCA is also looking into the company’s debt collection practices.
New York law requires that if a dealership recommends a financing company such as Santander to a consumer, they must disclose the interest rate that the company can charge and other terms and charges, but DCA’s earlier investigations uncovered information that suggests that dealerships may not be complying with this requirement. Instead, dealers are directing consumers to costly loans which benefit the dealer and ultimately harm the consumer.
