The New York State Department of Financial Services (DFS) has finalized a consent order with Santander Consumer USA Inc. following an investigation into the company’s automobile loan servicing practices. According to a DFS news release, the agency found that Santander charged certain borrowers recurring fees related to loan payment extensions that were not fully disclosed in customer agreements.
As part of the settlement, Santander will pay a $400,000 civil penalty to the State of New York and provide more than $275,000 in consumer restitution through refund payments and debt waivers for affected borrowers.
“The department is committed to holding institutions accountable for essential consumer safeguards under New York Law,” said DFS Acting Superintendent Kaitlin Asrow in the agency’s announcement.
Under New York Banking Law, licensed lending institutions are prohibited from advertising, printing, or distributing statements or loan terms that are false, misleading, or deceptive.
According to DFS, the issue stemmed from a discrepancy between Santander’s loan extension agreements and the way its billing system applied fees. Documentation provided to borrowers stated that a single $25 fee would be charged to process a payment extension. However, DFS found that Santander’s servicing system assessed an additional $25 fee each month that the extension remained in effect.
Although Santander discontinued the recurring fee practice before the settlement was finalized, DFS reported that New York borrowers paid approximately $237,000 in fees that were not disclosed in the extension agreements. An additional $86,000 in fees was assessed to borrowers but was never collected.
Under the terms of the consent order, Santander is required to:
- Pay a $400,000 civil penalty to the State of New York.
- Provide full restitution to affected borrowers who held auto loans with Santander before 2018.
- Issue refund checks, including applicable interest, to borrowers who paid the fees.
- Waive outstanding fees that were assessed but not collected.
The enforcement action highlights the importance of clear and accurate fee disclosures in consumer lending and reflects DFS’s ongoing oversight of lending practices in New York.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
