Order: Auto loan program partners to refund about $6.5 million to servicemembers
If you are a servicemember who participated in the Military Installment Loans and Educational Services (MILES) auto loan program operated by U.S. Bank and its nonbank partner, Dealers’ Financial Services (DFS), you may benefit from an order we announced today.
As a result of this enforcement action, U.S. Bank and DFS must return about $6.5 million to servicemembers for failing to properly disclose an allotment fee charged to participants, as well as the timing of the allotment payments. The companies also misrepresented the true cost and coverage of add-on products financed along with the auto loans.
Servicemembers are not required to take any action to receive their reimbursement. U.S. Bank and DFS will provide the reimbursements to the victims as an account credit or as a bank check in the mail.
Under the CFPB order, the companies have agreed to:
Stop deceptive practices: U.S. Bank and DFS are required to end deceptive marketing and lending practices and will be prohibited from making misleading claims or omissions when marketing add-on products through MILES or similar programs in the future. Pay restitution to servicemembers: U.S. Bank has agreed to pay at least $3.2 million and DFS has agreed to pay $3.3 million to over 50,000 servicemember victims for violating the Truth in Lending Act and federal laws that prohibit deceptive marketing and lending practices. Servicemembers who had outstanding MILES loans between January 1, 2010 and today may receive restitution under today’s orders. Provide refunds or credits without any further action by consumers: Servicemembers are not required to take any action to receive their reimbursement. U.S. Bank and DFS will provide the reimbursements to the victims as an account credit or as a check in the mail. Stop requiring the use of allotments for future loans: U.S. Bank and DFS have also agreed to modify the MILES program so that servicemembers are not required to use allotments in order to participate. Improve disclosures: The companies will take steps to improve their disclosures to servicemembers regarding the cost and other material terms of add-on products. Required reporting: Under the orders, both companies will be required to submit a redress plan that we must approve. They must also provide reports to us to demonstrate their compliance with the orders.Read more about what servicemembers should know about military allotments.