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Agency fines used car dealer over loan collection efforts

Four years ago, Senator Elizabeth Warren advocated for the creation of a new agency to help protect consumers from predatory lenders. The agency, The Consumer Financial Protection Bureau, has now fined a used car dealership over its loan collection efforts. While this particular dealership does not have locations in Washington, residents here may have financed cars through similar businesses.

According to the records, the agency investigated the company, DriveTime Automotive Group, Inc., over its alleged harassment of its customers who were reportedly in arrears on their accounts. The company is one of the largest used dealerships with the option to "buy here and pay here" in the nation. Many have equated this practice with other types of sub-prime lending.

The company reportedly has close to 300 collection agents whose purpose is to contact customers repeatedly by phone in order to secure payments. Some customers reportedly received 30 calls a day, even after they requested no telephone contact. Additionally, the company has been accused of knowingly reporting inaccurate information to credit agencies, thereby negatively impacting a consumer's credit rating. CFPB levied fines of $8 million against DriveTime in connection with the allegedly fraudulent practices.

This company is not the only one that has been the focus of the federal agency, as other lenders and a debt collection company have all been fined for violating the rights of consumers with unethical or unlawful loan collection efforts. In many cases, consumers who choose these types of lenders end up in worse financial shape, as the interest rates are exceedingly high, adding hundreds of dollars to the cost of the loan over time. Washington families that find themselves in dire financial straits may choose to research how a bankruptcy filing may be of benefit to them by allowing them to escape out from under intense financial burdens while seeking a new start.

Source: The Huffington Post, "Used Car Dealership Hit With $8 Million Fine For Allegedly Harassing Customers", Hunter Stuart, Nov. 20, 2014

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