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FIFTH THIRD BANK TO PAY $18 million to African-American and Hispanic auto borrowers for lending discrimination and $3 million to credit card customers for deceptive marketing practices.
Consumer Financial Protection Bureau “CFPB” and Department of Justice (DOJ) entered into an agreement with Fifth Third Bank requiring that the bank change its pricing and compensation structure in order to reduce the risks of discrimination, and to pay $18 million to harmed African-American and Hispanic borrowers. The CFPB’s action against Fifth Third’s deceptive marketing of credit card add-on products requires the bank to provide an estimated $3 million in relief to eligible harmed consumers and pay a $500,000 penalty.
It appears that Fifth Third may have let their employees or contract auto dealers run amuck because CFPB Director Richard Cordray said “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination.”
Auto-Lending Enforcement Action
As an indirect auto lender, Fifth Third sets a risk-based interest rate, or “buy rate,” that it conveys to auto dealers. The bank then allows auto dealers to charge a higher interest rate when they finalize the deal with the consumer. This is typically called “dealer markup.” Markups can generate compensation for dealers while giving them the discretion to charge consumers different rates regardless of consumer creditworthiness. Over the time period under review, Fifth Third permitted dealers to mark up consumers’ interest rates as much as 2.5 percent.

• Resulted in African-American and Hispanic borrowers paying higher dealer markups without regard to the creditworthiness of the borrowers.
• Injured thousands of minority borrowers by charging $200 more for auto loans.

Under the CFPB order, Fifth Third must:

• Substantially reduce or eliminate entirely dealer discretion.r.
• Pay $18 million in damages for consumer harm.
• Pay to hire a settlement administrator to distribute funds to victims.

CFPB’s consent order in the auto lending matter
Credit Card Enforcement Action
The CFPB reached an an agreement with Fifth Third for deceptive acts or practices in the marketing and sales of its “Debt Protection” credit card add-on product. The telemarketers promised to allow enrolled cardholders to request the cancellation of credit card payments if they experienced certain hardships such as job loss, disability, and hospitalization. The Bureau found that Fifth Third’s telemarketers deceptively marketed the add-on product during call including: misrepresenting costs and fees for coverage; misrepresenting or omitting information about eligibility for coverage; and illegal practices in the enrollment process.
This has taken quite a while to process because in September 2012, Fifth Third ceased telemarketing the product and ceased all other enrollments in February 2013.
The CFPB’s order requires that Fifth Third provide $3 million in relief to roughly 24,500 customers, cease engaging in illegal practices, and pay a $500,000 penalty to the CFPB civil penalty fund.
The CFPB’s consent order in the credit card add-on matter.

 

For auto loan or credit card questions or to submit a complaint, consumers can contact the CFPB at (855) 411-2372 or visit consumerfinance.gov.
The post Ripped Off by Fifth Third Bank? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

Private Student Loans and Bankruptcy – an evolving tug of war.
Just because a school calls a loan a “private student loan” does not mean it is a student loan for bankruptcy purposes.  There are specifics requirements for a loan to qualify as a student loan under the Bankruptcy Code.  If a loan is not a student loan then it is most likely discharged (forgiven) like medical bills and creditors cards.
So, what are the requirements of the U.S. Bankruptcy Code?

1. The loan must be a “qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986.”
2. Next question – what is a “qualified education loan“ under the Internal Revenue Code?  It must be a loan from an “eligible educational institution.”
3. How do you determine if your school is an “eligible educational institution”?   Each year the Department of Education publishes a list of qualifying schools.

If your school is not on this list, the loan is not a “student loan” as defined by the Bankruptcy Code and can be discharged in bankruptcy.
Next steps:

1. Determine whether your student loan is private or federal.  Note – the above argument only works on private student loans.  If you are unsure look at the National Student Loan Data System.  If your loan is there you have a federal student loan, but it is not then you probably have a private loan.  You should also check your credit report if you’re still unsure.   (Sallie Mae and Navient have both federal and private student loans.)
2. Once you have determined this is a private student loan then find out if the loan is from an “eligible educational institution.”  See the list released each year by the Department of Education of qualified educational institutions.  Note – make sure to look for the list for the year you received your student loans.

Beware the law is evolving every day and may change the above information.  Also the court decisions may different in each state.
This information is not intended to be legal advice.  In order to know your rights seek the advice of an experienced bankruptcy and student loan attorney licensed in your state.

The post Private Student Loan May Be Discharged in Bankruptcy appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

Santander Bank Fined $10 Million for Illegal Overdraft Practices
The Consumer Financial Protection Bureau (CFPB) ordered Santander Bank, N.A. to pay a $10 million fine for illegal marketing of overdraft services and using a telemarketing firm that signed some bank customers for the overdraft service without their consent.
According to CFPB Director Richard Cordray “Santander tricked consumers into signing up for an overdraft service they didn’t want and charged them fees.  Santander’s telemarketer used deceptive sales pitches to mislead customers into enrolling in overdraft service. We will put a stop to any such unlawful practices that harm consumers.”
Why are these actions illegal?
Since 2010, federal rules have prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers specifically agreed. If consumers don’t agree, the banks may decline the transactions because of insufficient or unavailable funds, and cannot charge an overdraft fee.
The Bureau found Santander Bank’s illegal and improper practices included:

• Signing consumers up for overdraft service without their consent.
• Deceiving consumers that overdraft service was free.
• Deceiving  consumers about the fees they would face if they did not opt in.
• Falsely claiming the call was not a sales pitch.
• Failing to stop its telemarketer’s deceptive tactics.

Enforcement Action – So what has CFPB ordered Santander Bank to do?

• Validate all opt-ins associated with the telemarketer.
• Not use a vendor to telemarket overdraft service.
• Increase oversight of all third-party telemarketers.
• Pay a $10 million penalty.

The full text of the CFPB’s consent order: http://files.consumerfinance.gov/f/documents/20160714_cfpb_Consent_Order.pdf

The purpose of the Consumer Financial Protection Bureau.  The CFPB is “a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”  For more information, visit consumerfinance.gov.
Youtube from CFPB: https://www.youtube.com/watch?v=BHMUVfjffhA&feature=youtu.be

The post Santander Bank Fined $10 Million for Illegal Overdraft Practices appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

Santander Bank fined $10 million for illegal overdraft service practices.
The Consumer Financial Protection Bureau (CFPB) ordered Santander Bank, N.A. to pay a $10 million fine for illegal marketing of overdraft services and using a telemarketing firm that signed some bank customers for the overdraft service without their consent.
According to CFPB Director Richard Cordray “Santander tricked consumers into signing up for an overdraft service they didn’t want and charged them fees.  Santander’s telemarketer used deceptive sales pitches to mislead customers into enrolling in overdraft service. We will put a stop to any such unlawful practices that harm consumers.”
Why are these actions illegal?
Since 2010, federal rules have prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers specifically agreed. If consumers don’t agree, the banks may decline the transactions because of insufficient or unavailable funds, and cannot charge an overdraft fee.
The Bureau found Santander Bank’s illegal and improper practices included:

• Signing consumers up for overdraft service without their consent.
• Deceiving consumers that overdraft service was free.
• Deceiving  consumers about the fees they would face if they did not opt in.
• Falsely claiming the call was not a sales pitch.
• Failing to stop its telemarketer’s deceptive tactics.

Enforcement Action – So what has CFPB ordered Santander Bank to do?

• Validate all opt-ins associated with the telemarketer.
• Not use a vendor to telemarket overdraft service.
• Increase oversight of all third-party telemarketers.
• Pay a $10 million penalty.

The full text of the CFPB’s consent order: http://files.consumerfinance.gov/f/documents/20160714_cfpb_Consent_Order.pdf

The purpose of the Consumer Financial Protection Bureau.  The CFPB is “a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”  For more information, visit consumerfinance.gov.
Youtube from CFPB: https://www.youtube.com/watch?v=BHMUVfjffhA&feature=youtu.be
The post Santander Bank Fined $10 Million for Illegal Overdraft Practices appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.