Two consumer advocacy groups have filed a Freedom of Information Act (FOIA) request with the Consumer Financial Protection Bureau intensifying inquiries into why the bureau has stalled a pending lawsuit against Santander Consumer USA.
The Communications Workers of America (CWA) in partnership with the Committee for Better Banks filed the request seeking information on acting director Mick Mulvaney’s “conflicting” connections to Santander Bank.
At the end of November, just before former CFPB Director Richard Cordray’s resignation, Reuters reported that the regulatory agency was preparing to file suit over Santander Consumer USA’s guaranteed-asset protection (GAP) policies.
However, Mick Mulvaney’s contested appointment as acting director included a moratorium on all regulatory actions, new rulemaking, and hiring while he reviews the agency’s operations.
Mulvaney’s former chief of staff under the Office of Management and Budget, Natalee Binkholder, is now lobbying on behalf of Santander, which the groups are claiming as a conflict of interest.
“Mulvaney must be fully transparent about his connections with Santander Bank and cease these tactics that leave Santander and other predatory institutions above the law,” said Teresa Casertano, global organizing coordinator at the CWA.
The consumer advocacy groups are pushing the bureau to move forward with the lawsuit, citing former employees who saw deceptive auto loan packages.
“When I worked at Santander, I would regularly call customers to collect on loans and added fees they didn’t know they had,” said Quarlondra Coleman, who worked at Santander Consumer as a collections worker until February. “I shared my story with the CFPB because I was tired of watching our customers dig themselves into thousands of dollars in debt because of Santander’s trickery.”
Santander Consumer USA has previously told Auto Finance News that it does not comment on ongoing regulatory matters.
It’s not clear what aspects of Santander’s GAP policies are under scrutiny, but federal and local regulators have been eyeing these auto finance packages all year. In August, Wells Fargo Dealer Services revealed that the Federal Reserve Bank of San Francisco is investigating the lender for failing to properly refund consumers for pre-paid GAP policies when an auto loan is paid off early. Alabama, Colorado, Indiana, Iowa, Maryland, Massachusetts, Oklahoma, Oregon, and South Carolina all have laws requiring refunds.
Shortly after, Ally Financial tweaked its GAP refund policies to encompass the added layer of scrutiny across all 50 states — whether the state required it or not.
