A subprime auto loan company that allegedly violated Indiana consumer protection laws has agreed to waive more than $14.1 million in vehicle debt and pay restitution of $261 each to more than 5,000 Hoosiers.
Attorney General Todd Rokita announced Tuesday the Indiana impact of the multistate settlement reached last year between 33 states and Santander Consumer USA Inc.
Rokita said the $261 checks soon should be arriving in the mailboxes of eligible Hoosiers who did business with the lending company.
"As part of our mission to protect Hoosier consumers, we will continue to hold businesses accountable for following the law," Rokita said. "Hard-working families face enough challenges without having to contend with companies trying to take advantage of them."
According to the attorney general's office, Santander allegedly used sophisticated credit scoring models to predict which borrowers were likely to default on its auto loans, and then saddled those borrowers with hefty loan payments relative to their incomes plus significant fees.
Santander’s aggressive pursuit of market share also allegedly spurred it to ignore auto dealers potentially abusing the system by falsely reporting consumer income and expenses. Santander allegedly misled consumers about their rights and the risks of partial payments and loan extensions, the attorney general said.
The settlement agreement requires Santander going forward to factor a consumer’s ability to repay a loan into its underwriting considerations.
Records show the state of Indiana received $30,000 in civil penalties from Santander, in addition to the 1,515 forgiven Indiana loans and restitution checks to eligible Hoosiers.
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