On November 26, the U.S. District Court for the Northern District of Georgia granted the CFPB’s motion for default judgment against the defendant, an auto loan servicing company, determining that the defendant’s bankruptcy filing did not stay the civil action. The court found the defendant liable for violating the CFPA, resulting in wrongful activation of starter-interruption devices (SIDs), failure to refund unearned guaranteed asset protection (GAP) fees, overbilling for insurance, misapplication of consumer payments, and wrongful repossession of vehicles. The court ordered the defendant to pay over $42 million in combined damages, restitution, interest and civil penalties, as well as enjoin permanently the defendant from future violations.

As previously covered by InfoBytes, the CFPB initially sued the auto loan servicer for allegedly engaging in unfair acts and practices in violation of the CFPA, including: wrongfully activating starter-interruption devices, which are devices that warn consumers with beeps or disable their car altogether when they make a loan payment late; failing to ensure refunds of over millions of dollars of GAP insurance premiums after consumers paid off their loan early or their car was repossessed by the auto-loan servicer; erroneously billing 34,000 consumers for collateral-protection insurance by charging consumers twice each billing cycle; wrongfully applying extra consumer payments first to late fees instead of accrued interest; and wrongfully repossessing consumers’ cars dozens of times.

The court noted its most recent decision was supported by expert testimony to quantify damages for wrongful repossessions, erroneous SID disables, and erroneous warning tones. However, the injunctive relief granted by the court was noted as largely “academic,” since the defendant has already ceased operations.