U.S. Bank to Pay Back Military Customers as CFPB Cracks Down

June 27, 2013
Bloomberg BusinessWeek 
consumer financial protection bureau news

U.S. Bancorp (USB) and a partner company, Dealers' Financial Services (DFS), will repay roughly $6.5 million to settle Consumer Financial Protection Bureau (CFPB) claims that they misled enlisted persons who participated in a vehicle lending program. In a June 27 statement announcing the settlement, Richard Cordray said the firms "failed to properly disclose costs associated with repaying auto loans" issued to service members under U.S. Bancorp's Military Installment Loans and Educational Services program. Specifically, borrowers ended up paying $180 more over the course of the 60-month loan as a result of the hidden fee. DFS also understated the costs of a service contract and insurance coverage sold with the loans, which inflated costs for customers. Minneapolis-based U.S. Bancorp, which plans to terminate the auto lending program, will repay $3.2 million; while Lexington, Ky.-based DFS will repay $3.3 million. More than 50,000 military borrowers will share the compensation, receiving an average of less than $130 each.
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