CHARLESTON — West Virginia Attorney General Patrick Morrisey's office has announced it is part of a $550 million, multistate settlement to resolve allegations against the nation’s largest subprime auto lender.
The settlement with 34 attorneys general requires Santander Consumer USA Inc. to provide affected consumers with more than $497 million in direct relief and restitution. The lender also must adopt protocols to factor a consumer’s ability to pay into its underwriting.
West Virginia’s share exceeds $6.4 million. That includes more than $5.9 million in canceled debt for consumers, $527,479 in consumer restitution and $30,000 to the state.
Morrisey
“Businesses must always act in an ethical, responsible way,” Morrisey said in a statement. “Those that violate our consumer protection laws will be held accountable. This settlement should serve as a warning to anyone who seeks to take advantage of vulnerable consumers.”
Morrisey's office said the settlement resolves allegations that Santander violated consumer protection laws by exposing subprime consumers to unnecessarily high levels of risk and knowingly placing these consumers into auto loans with a high probability of default.
The multistate investigation revealed Santander allegedly knew certain segments of its loans were unsound and would never be fully repaid. Borrowers with low income were then unnecessarily exposed to high levels of risk, which had the effect of further damaging the credit scores of many.
The coalition also alleges Santander turned a blind eye to dealer abuse due to its aggressive pursuit of market share. The company is additionally charged with having failed to meaningfully monitor dealer behavior to minimize the risk of receiving falsified information from dealers who simply wanted to promote the likelihood of a sale.
The investigation further accused Santander of having actively misled consumers about their rights and the risks associated with partial payments and loan extensions.
Restitution is available to certain subprime consumers who defaulted on loans between Jan. 1, 2010, and Dec. 31, 2019. For consumers with the lowest quality loans who defaulted as of December 31, 2019, and have not had their cars repossessed, Santander must allow them to keep their vehicles and waive any loan balance up to a total value of $45 million in loan forgiveness.
West Virginia joined the Illinois-led settlement with attorneys general from Arizona, Arkansas, California, Connecticut, the District of Columbia, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington and Wyoming.