The Federal Trade Commission finalized a proposed consent order where a vendor, National Payment Network, agreed to pay almost $2.5 million in refunds and waived fees. The FTC said the company failed to adequately disclose that sign-up fees for a biweekly payment program could outweigh the savings.
In a separate order, a dealership group that did business with San Mateo, Calif.-based NPN agreed to pay $184,000 for customer refunds. That consent order hasn’t gotten final approval yet, the FTC said.
The businesses neither admitted nor denied the FTC’s allegations. Both parties said they stopped offering the biweekly payment program in question, back in 2013.
Biweekly payments save money on interest because consumers effectively make 13 monthly payments annually instead of 12. Payments are made via automatic money transfers every two weeks.
Customers pay fees to join the program and to set up the automatic payments. The National Automobile Dealers Association warned its members last year the FTC was investigating biweekly payments. A May 2014 memo from the NADA said dealerships should “accurately and adequately disclose all fees and costs, and not … overstate any potential benefits.”
The consent orders were initially announced in late March. Final approval was subject to a public comment period. The FTC said the NPN final consent order was identical to the proposed order.
FTC and other compliance issues will be key topics at the upcoming Auto Finance Risk & Compliance Summit, which will take place May 18-19 in San Diego.Like This Post