Used-Car Lender SNAAC Settles CFPB Complaint

The Consumer Financial Protection Bureau filed a consent order with Security National Automotive Acceptance Company (SNAAC), based on allegations that the company employed illegal debt collection practices, according to a CFPB press release issued today. The order requires SNAAC, which specializes in loans to servicemembers, to refund or credit about $2.28 million to consumers who were allegedly harmed, and pay a penalty of $1 million.

A separate court order bans SNAAC from using “aggressive tactics, such as exaggeration, deception, and threats to contact commanding officers, to coerce servicemembers into making payments,” according to the release.

“Security National Automotive Acceptance Company must refund or credit its customers $2.28 million for coercing money out of them using illegal debt collection practices,” CFPB Director Richard Cordray said in the release. “Servicemembers should not be forced to pay because a debt collector used deceptive pressure tactics.”

The CFPB began seeking action against SNAAC in June, for aggressive collection tactics when servicemembers defaulted on their loans, allegedly taking advantage of servicemembers’ special vulnerability to the threat of disciplinary action. The lender allegedly exaggerated the possible consequences within the military justice system, if they failed to remain current on debts.

“In many instances, consequences described by SNAAC collectors were exaggerated: they were extremely unlikely to occur or could not occur as a result of servicemembers’ consumer-debt delinquencies,” the CFPB said in an earlier complaint. The CFPB said SNAAC often threatened to contact servicemembers’ commanding officers.

Along with the $2.28 million in consumer refunds, and a $1 million fine, SNAAC will be required to end threats to contact commanding officers, misstatements about potential disciplinary action, false threats of legal action against a consumer, and false threats of garnishing wages, the CFPB said.

SNAAC has neither admitted nor denied the allegations of the complaint, according to the CFPB.

“We are agreeing to this settlement in an effort to move forward serving our customers in the respectful, honorable manner we have always done,” a SNAAC’s spokesperson said in a statement sent to AFN.

The agreement comes more than two years after the CFPB launched an inquiry into SNAAC, during which time the company “fully cooperated with the agency’s process and voluntarily adjusted some of its policies and personnel to ensure SNAAC continued to provide its customers with the best service possible,” according to the statement.

Despite admitting no wrongdoing, the company said it thought it best to settle with the CFPB at this time.

“Despite our strong disagreement with the CFPB’s complaint, the cost and distraction of continuing to fight this was simply not in the best interests of our customers, associates or shareholders. It’s time to move on,” SNAAC said. “We’re proud of the work that we’ve done for our customers over the past 25 years, many of whom would not have had access to the credit they and their families need.  Every day we strive to treat our customers with the dignity and respect they deserve and we look forward to continuing in that tradition.”

SNAAC LLC is an Ohio-based auto finance company that operates in more than two dozen states and lends money primarily to active duty and former military to buy used motor vehicles.