The CFPB ordered on Thursday that U.S. Bank and Dealers’ Financial Services, one of its nonbank affiliates, return approximately $6.5 million to servicemembers for the companies’ engagement in deceptive marketing and lending practices.
The companies created the Military Installment Loans and Educational Services program to sell subprime auto loans to active-duty members of the armed forces. The MILES program required service members to pay straight from their paychecks without properly disclosing details of the program itself and all associated fees.
Additionally, the CFPB review found that the MILES program deceived service members by understating the cost of certain add-on products sold in connection with the loans.
Though DFS and U.S. Bank are required to pay back the fees and costs paid by service members as a result of allotments they were required to use, the CFPB will not impose any civil penalties due to the companies’ cooperation in resolving the issue.
“These orders are part of the Consumer Bureau’s larger efforts to protect service members,” CFPB Director Richard Cordray said. “The Dodd-Frank Act recognized that service members deserve special attention when it comes to the consumer financial protection laws. Today’s action reflects our determination to act to protect service members against harmful practices in the consumer financial marketplace. The Consumer Bureau’s Office of Servicemembers Affairs, under the leadership of OSA Assistant Director Holly Petraeus, and everyone at the Bureau will continue to stand side-by-side with our military and veterans.”