Unrepentant Auto Loan Company Pays Penalty, Agrees Not to Illegally Harass Borrowers

Friday, October 02, 2015

“There is no excuse for lying to your customers.”

With those words, federal Consumer Finance Protection Bureau (CFPB) Director Richard Cordray ordered Los Angeles-based Westlake Financial Services LLC and its subsidiary Wilshire Consumer Credit LLC to pay $44.1 million to customers for deception, intimidation and spreading false information. The consent order (pdf) also requires them to pay an additional $45.25 million civil penalty.

Westlake Financial has more than $2 billion in managed assets and 270,000 customers in all 50 states. They buy and service automobile loans, specializing in subprime loans to low-income people with low credit scores. Their customers tend to have trouble making payments. The subsidiary makes loans with the auto title as security.

The bureau found that Westlake employed a number of illegal, and pretty despicable, tactics to collect money since at least 2010. They used a program called Skip Tracy on 137,000 accounts to fool telephone call-waiting systems with disguised aliases, pretending to be, among other things, a repo company demanding borrowers surrender their cars.

Westlake employees faked calls from pizza shops, florists, family member or friends to elicit confirmation of identity or an address. They falsely threatened to refer borrowers for criminal investigation or prosecution and used Skip Tracy to bolster their claims of being part of law enforcement.

Westlake would call borrowers who had already had their vehicles repossessed and pretend to be from a storage facility that would release the car if partial payment of the debt was made. In fact, the cars could not be released without full payment.

They would call friends, family, references and employers without permission and badmouth the borrowers in a not always truthful fashion. Westlake also paid repo companies to call borrowers and threaten them with repossession before deadlines had been met.

They lied to borrowers about terms of loan extensions and changed due dates without consultation. The initial loans weren’t properly explained, hiding their true cost.

The advocacy group Consumer Affairs maintains a lively online file of complaints and reviews about the company.

For their part, Westlake said in a statement that they had no intention of making any excuses for their behavior. They shared “a fundamental agreement with the CFPB in the importance of treating consumers fairly, appropriately and respectfully in all phases of the auto lending experience.”

Westlake admitted nothing and said they settled with the feds to avoid costly litigation. However, if they did do something bad it was way back in 2010 and they don’t do that sort of thing anymore. They are eager to become “a leader in operational compliance best practices” and will continue to “fill niches for consumers who may not otherwise be able to receive a reasonably priced auto loan.”

In other words, they will continue to make enormous profits selling subprime auto loans to people who can’t afford them. A couple days before the CFPB announced the deal, Westlake Financial announced that it was expanding operations in Dallas, where state regulators are known to be less persnickety.

–Ken Broder


To Learn More:

CFPB Orders Westlake, Wilshire to Pay Auto Customers $44.1 Million (by Hannah Lutz, Automotive News)

L.A. Auto Finance Firms Must Refund $44 Million for Collection Tactics (by Jim Puzzanghera, Los Angeles Times)

CFPB Orders Indirect Auto Finance Company to Provide Consumers $44.1 Million in Relief for Illegal Debt Collection Tactics (Consumer Finance Protection Bureau)

Leave a comment