Federal Trade Commission tightens regulation of auto lending

The Federal Trade Commission (FTC) has ramped up its oversight of the auto lending market, with an $82,777 penalty for the loan-servicing arm of Texas-based auto dealer Tricolor Auto Group over claims the company failed to have written policies and procedures regarding the accuracy of reported credit information, and failed to properly investigate disputed consumer credit information.

“An inaccurate credit report can have a huge impact on consumers’ ability to make purchases, be hired and more,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “This case makes it clear that businesses must take the proper steps to make sure the information they provide to credit bureaus is accurate.”

The FTC claimed that the company’s loan-servicing group, Tricolor Auto Acceptance, (TAA), violated a rule that requires companies reporting information about consumers to consumer reporting agencies (CRAs) to maintain policies and procedures designed to ensure that the information they report is accurate, and to allow consumers to dispute information they believe is inaccurate directly with the company that furnished the information.

While TAA provides information on thousands of consumers to one CRA, the FTC’s complaint alleges that TAA had no written policies or procedures addressing how to ensure the accuracy of that information. The complaint further alleges that when consumers disputed the accuracy of the information, TAA referred them back to the CRA instead of conducting an investigation as required under the legislation.

Penalty for misleading finance ads

The FTC has also taken action against a West Virginia auto dealer, Ramey Motors, over the company’s failure to comply with an earlier stipulation regarding the way it advertised the cost of financing a vehicle, and has slapped the dealership with an $80,000 penalty.

The agency claims that Ramey Motors’ advertisements violated a consent order passed on it by the FTC in 2012, by concealing important terms of sale and lease offers, such as a required down payment, and failing to make credit disclosures clearly and conspicuously, as required by federal law.