Consumer Portfolio Services (CPS), a national subprime auto lender, agreed last week to pay more than $5.5 million to settle charges by the FTC that the company allegedly used illegal tactics to collect debts not owed by consumers.
The California-headquartered company agreed to refund or adjust 128,000 accounts by more than $3.5 million and forebear collections on another 35,000 accounts to settle charges that the company violated the FTC ACT.
CPS will pay an additional $2 million in civil penalties to the FTC to settle charges that the company violated the Fair Debit Collection Practices Act and the Fair Credit Reporting Act.
According to the FTC, CPS allegedly misrepresented the fees owed by consumers in collection calls and statements, modified contracts without notifying the consumer, misrepresented that consumers must use certain payment methods requiring service fees and improperly collected fees or other amounts.
Under the terms of the consent order issued by the FTC, CPS is required to alter its business practices to comply with federal law. The company will also be required to implement and maintain a data integrity program to ensure the accuracy and completeness of its servicing processes and data, and it must provide the FTC with periodic assessments of the program.