Lobel Financial Corporation

Agency: Consumer Financial Protection Bureau
Description:

On September 21, 2020, the Consumer Financial Protection Bureau (CFPB) issued a consent order against Lobel Financial Corporation. The CFPB alleges Lobel engaged in unfair practices with respect to its Loss Damage Waiver (LDW) product, in violation of the Consumer Financial Protection Act (CFPA). When a borrower has insufficient insurance, rather than force-placing collateral-protection insurance, Lobel places the LDW product, which is not itself insurance, on borrower accounts and charges a monthly premium. The LDW product provides that Lobel will pay for the cost of covered repairs and, in the event of a total vehicle loss, cancel the borrower’s debt.

The CFPB’s investigation found that, since 2012, Lobel charged customers LDW premiums after they had become ten-days delinquent on their auto loans but did not provide them with LDW coverage. The CFPB also found that Lobel charged some customers LDW-related fees that Lobel had not disclosed in its LDW contract and that these practices were unfair under the CFPA.

The order requires Lobel to pay $1,345,224 in consumer redress to approximately 4,000 harmed consumers and a $100,000 civil money penalty. The order also prohibits Lobel from failing to provide consumers with LDW coverage or similar products or services for which it has charged consumers or from charging consumers fees that are not authorized by its LDW contracts.

For details of the order visit the CFPB website https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-settles-auto-lender-unfair-loss-damage-waiver-practices/.