Massachusetts AG Settles With Auto Lender Over Exceeding Interest Rate Caps

On December 27, 2018, the Massachusetts Attorney General’s Office (AG) announced​ that it had entered into a consent order with an auto lender, resolving allegations that the lender violated the Massachusetts Cost of Consumer Credit Disclosure Act. The AG alleged that an investigation uncovered that the lender required consumers to enter into Vendor Single Interest insurance policies, which protect a lender in the event of theft or damage to the collateral.  However, the AG alleged that the lender used these policies to recover for credit losses, and when insurance payments were added to other amounts, the total APR exceeded the state statutory cap of 21 percent.