CFPB enters complicated consent order with auto-finance payment firm


A firm that was supposed to pull funds from contract holders’ bank accounts and deliver the money to auto-finance companies entered into a consent order with the Consumer Financial Protection Bureau this week.

And in a twist, the penalties levied by the CFPB against the company might not be completely delivered.

Here’s what has happened, according to a news release from the bureau.

The CFPB issued a consent order against SMART Payment Plan (SMART), finding that the company’s disclosures of its payment program contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices. SMART is a limited liability company with its principal place of business in Austin, Texas.

The bureau recapped that SMART operated a payment program for auto financing called the SMART Plan that deducted payments from consumers’ bank accounts every two weeks and then forwarded these payments every month to the consumers’ contract holders.

The consent order imposes a judgment against SMART requiring it to pay $7.5 million in consumer redress and requirements to prevent future violations.

Bureau officials explained SMART provided consumers individualized “benefits summaries” that purported to state a specific amount of interest savings or other money savings consumers would get by enrolling in the SMART Plan. But SMART’s fees would ordinarily exceed the savings, according to the regulator.

“SMART’s disclosures thus created the misleading impression that consumers would save money using its product,” the CFPB said.

Now to the complicated part involving penalties.

The bureau said its ordered redress amount is suspended upon SMART’s payment of $1.5 million by Dec. 31 and a $1 civil money penalty to the regulator.

Officials indicated the suspension of the full payment for redress, as well as the $1 civil penalty, is based on SMART’s demonstrated inability to pay more based on sworn financial statements.

The CFPB added harmed consumers may be eligible for additional relief from the bureau’s civil penalty fund.

“The consent order prohibits SMART from making any misrepresentations about its payment programs,” officials reiterated.

“It also requires SMART to account for the total costs for its payment programs, as well as the net savings or costs after deducting any fees, whenever SMART makes claims about savings or financial benefits,” they went on to say.