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CFPB Orders U.S. Bank, DFS to Pay $6.5M in Restitution

June 28, 2013
2 min to read


Washington, D.C. — U.S. Bank and one of its nonbank partner companies, Dealers’ Financial Services (DFS), were ordered to pay $6.5 million in restitution to participants in the Military Installment Loans and Educational Services (MILES) auto loans program, the Consumer Financial Protection Bureau announced this week.


The bureau’s examinations found that U.S. Bank allegedly failed to properly disclose all the fees charged to participants in the program, as well as the schedule of payments, a violation of the Truth in Lending Act and the Dodd Frank Wall Street Reform and Consumer Protection Act’s prohibition on deceptive acts or practices.

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“Through the course of our oversight examinations, we learned that the MILES program was failing to properly disclose costs associated with both the military allotments system, which it required service members to use in order to participate in the program, and the expensive add-on products being sold to service members,” said CFPB Director Richard Cordray.


Under the military allotment system, service members pay by allotment and the lenders often require service members to use third-party processors that charge one or more fees. If lenders require payments by allotment, military consumers could be left with no choice but to pay this additional processing fee in order to qualify and pay for the loan, the CFPB charged.


The bureau has ordered U.S. Bank to return the undisclosed fees and costs that service members paid as a result of the allotments they were required to use — estimated to be at least $3.2 million. Dealers’ Financial Services has been instructed to return approximately $3.3 million to service members related to the cost of add-on products.


“Notably, we are imposing no civil monetary penalties in this instance in part because of the manner in which U.S. Bank and DFS cooperated with the bureau to resolve these matters,” Cordray added.


Both companies have agreed to halt practices in question, as well as pay restitution to service members, provide refunds or credits, and improve their disclosures to service members regarding the cost and other material terms of add-on products. Both companies will also be required to submit a redress plan that the CFPB must approve.

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The MILES program also will be modified so that service members are not required to use allotments in order to participate.


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