Georgia consumers will get a piece of a $550 million class-action settlement with the nation’s largest subprime auto financing company that is accused of targeting car buyers who could not afford to pay off their loans.
The case against Santander Consumer USA Inc. was brought by attorneys general in 34 states.
Georgia Attorney General Chris Carr announced the settlement Wednesday in a news release, saying Santander “violated consumer protection laws by exposing subprime consumers to unnecessarily high levels of risk and knowingly placing these consumers into auto loans with a high probability of default.”
Georgia will get a $6.25 million payout, which state consumers will receive through restitution and loan forgiveness.
Consumers who defaulted on certain subprime loans between Jan. 1, 2010, and Dec. 31, 2019, will be eligible.
For consumers with the lowest-quality loans who defaulted as of Dec. 31, 2019, and have not had their cars repossessed, Santander is required to allow them to keep their car and waive any loan balance, up to a total value of $45 million in loan forgiveness.
Santander will also pay up to $2 million for the settlement administrator who will administer restitution claims and pay an additional $5 million to the states, according to Carr’s release.
In all, Santander has agreed to waive the deficiency balances for certain defaulted consumers, with about $433 million in immediate forgiveness of loans still owned by the company.
The company will pay $65 million collectively to all 34 states for alleged consumer losses and provide hundreds of millions more in the form of loan relief.
“Businesses that take advantage of Georgia consumers by employing unfair lending practices will be held accountable by our office,” Carr said.
The settlement says consumers who defaulted on Santander loans from the company as of last year will be allowed to keep their car if it has not already been repossessed.
They are eligible for waivers for unpaid balances, the settlement says, according to The Associated Press.
The Illinois Attorney General’s office opened the investigation into Santander’s subprime lending practices in March 2015 after receiving numerous complaints related to the company’s subprime auto loans.
The investigation soon fanned out nationwide and found evidence of sophisticated credit-score tracking methods designed to prey on those with the highest risk of loan default.
Prosecutors accuse Santander of “turning a blind eye to abusive practices by the dealers originating many of these loans and failing to meaningfully monitor dealer behavior to minimize the risk of receiving falsified information, including the amounts specified for consumers’ incomes and expenses,” according to the news release.
If you think you are eligible for relief under this settlement, you can check for updates about relief administration by visiting santandermultistateagsettlement.com.
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