As if it wasn’t bad enough that car dealers are exploiting new and used car buyers by engaging in price-gouging during a pandemic. Making their customers’ lives even worse, some dealers and lenders are also illegally repossessing their cars. That’s so they can resell them and make another killing by exploiting someone else.
But the pro-consumer folks that President Biden appointed to head up the Consumer Financial Protection Bureau have noticed. They just announced they’re cracking down on illegal auto repossessions. Some of the practices they identified are:
- “Illegally seizing cars: Servicers are repossessing vehicles from borrowers who made payments sufficient to stop the repossession or who entered a payment plan. Given the high level of harm caused by wrongful repossessions, servicers must ensure that every single repossession is valid.
- Sloppy record keeping: Incorrectly coded records or agents failing to talk to their colleagues about canceling repossession orders hurts consumers and is a violation of federal law. Servicers need to ensure proper communication between them and any third-party processing a repossession.
- Unreliable balance inquiries: Inaccurate balances can lead to a borrower paying less than a sufficient amount to avoid delinquency, resulting in a repossession. People are also having their vehicles repossessed because their loan payments are processed in a different order than what they had been told.
- Ransom for personal property: Servicers are still holding personal property found in repossessed vehicles hostage until the property owner pays a fee, a practice the CFPB has been cracking down on for years.”
Read more: CFPB Moves to Thwart Illegal Auto Repossessions
What can you do if a dealer or lender repossesses your car, SUV, or truck, and you suspect it’s illegal?
Complain to the CFPB. Here’s where you can file a complaint: Submit a complaint
Get legal advice from an attorney who specializes in representing victims of auto fraud. Be sure to ask if they are willing to represent you on a “contingency” basis, or at no cost to you. Here’s a good resource for finding an auto fraud expert in your state, by contacting the National Association of Consumer Advocates.
How can you avoid becoming a victim of an illegal repossession?
#1 Join a local credit union and get pre-approved for a loan BEFORE you shop for a car. Most credit unions are not as crooked as the big auto lenders tend to be.
If you can defer buying a car, save up and pay cash.
Consider buying your car from another consumer, instead of a car dealer. That way, you can save a LOT of $$ and also avoid a lot of hassles, like having your car basically stolen and your personal property held hostage.
Here are CARS’ tips for how to get a good deal on a nice, safe, reliable used car — while telling crooked dealers and lenders “Bye-Bye”!!
Popular video about this auto lending scam: Comedian and news commentator John Oliver reveals how car dealers and lenders engage in “churning” — buying overpriced cars that often break down soon after purchase, repossess them, and resell them again and again, making a huge profit each time. At the expense of honest, hard-working car buyers.