December 1, 2020

Auto lending complaints rise amid COVID-19 pandemic, study says

The Consumer Financial Protection Bureau received more complaints about auto loans in the first five months of the pandemic than in any other five-month period since the bureau began tracking the data in its current form starting in April 2017, according to a new report by the U.S. Public Interest Research Group and Frontier Group.

More than 2,800 auto loan and lease complaints were submitted between March and July 2020 across auto lenders, according to the U.S. Public Interest Research Group, a record for the database. The report also examines the relationship between negative complaints and legal action taken against those lenders in recent years.

“While so many Americans have endured life-changing events in the past few months and have a lot less money, auto loan market abuses that have been growing since the 2008 financial collapse have dramatically worsened,” Ed Mierzwinski, senior director for federal consumer programs at the U.S. Public Interest Research Group Education Fund, said in a statement.

Amid the coronavirus pandemic, the nation’s largest auto lenders have granted forbearance protections and payment deferrals for millions of consumers. Several, including Hyundai and Ford, rolled out additional programs that support customers who lose their jobs amid the crisis.

In April 2017, the bureau reorganized how complaints appear in the database, creating separate categories for subjects including auto debt.

Nearly 19,000 consumer complaints about auto financing have been submitted to the bureau since 2017, the U.S. Public Interest Research Group’s report also said. Of the 15 major U.S. auto lenders highlighted in the report, subprime auto lender Santander has the most negative complaints in the history of the database with 2,347within the three-year span. Ally Financial had 1,437 since 2017, and GM Financial rounded out the top three with 938 complaints. With 280, Ford Credit had the fewest complaints among the top-cited auto lenders.

“While we are not going to comment on the report, we can tell you that Santander Consumer USA acted quickly to provide borrower relief from the onset of the COVID-19 pandemic,” Laurie Knight, a spokeswoman for Santander, said in an emailed statement. “We temporarily suspended vehicle repossessions, and as of June 30, 2020, SC granted approximately 730,000 loan extensions and 70,000 lease extensions, provided hardship modifications and fee waivers and refunds. We also responded to more than 1 million calls for assistance, and continue to help our customers today.”

A GM Financial spokeswoman said in an email that since the lender’s total consumer customer base is comprised of approximately 3 million people in the U.S., the average monthly number of Consumer Financial Protection Bureau complaints is significantly less than a hundredth of 1 percent of its consumer portfolio. Additionally, the spokeswoman said the company’s volume of complaints to the federal watchdog has stayed relatively consistent in recent months, with little variance in number of complaints on a month-to-month basis.

“GM Financial remains dedicated to ongoing enhancement and improvement of the customer experience, including offering support to our customers during COVID-19 through late-fee waivers, payment relief options, credit reporting measures and lease-end assistance,” the company said in a statement. “Further, the company has a strong track record of compliance, along with a clear and demonstrated commitment to promptly addressing customer issues that surface in the CFPB database.”

A spokeswoman with Ally Financial said the lender’s customer feedback echoes that of GM Financial’s in that it does not indicate an increase in complaints related to unfair debt collection practices or aggressive sales tactics throughout the pandemic.

“Customer reaction to our industry-leading response to COVID-19 has been overwhelmingly positive,” the spokeswoman said in a statement. “The steps we took to help consumers were generous, widely communicated and made as easy to access as possible with no questions asked. To suggest otherwise is misleading and inaccurate.”

Other highlights of the report:

  • Eight of the top 15 most-complained-about auto lenders cited in the report have been subject to Consumer Financial Protection Bureau enforcement.
  • More than 1 in 5 complaints about auto loans and leases since March 1 mentioned the COVID-19 pandemic.
  • Of complaints in the bureau database related to finance-and-insurance products, 29 percent include the term “warranty” and 39 percent include the term “insurance.”