Georgia (Aiexpress) – A federal court has ordered a defunct Georgia-based auto finance company, US Auto Sales Financing Services (USASF), to pay over $42 million in damages, restitution, and penalties for using fraudulent strategies that violated the Consumer Financial Protection Act (CFPA), in what appears to be a historic decision that represents a significant victory for consumer rights. This verdict stems from a series of legal lawsuits and investigations into the company’s wrongdoing, which included overbilling and erroneous vehicle repossession.
The firm, which operated 39 dealerships across six states (Georgia, Florida, Tennessee, South Carolina, North Carolina, and Alabama), abruptly ceased operations in April 2023, causing widespread confusion among customers and employees. USASF, which launched in Lawrenceville, Georgia, positioned itself as a convenient “buy here, pay here” dealership by providing in-house finance to its customers.
The Consumer Financial Protection Bureau (CFPB) filed the lawsuit in August 2023, accusing USASF of several unlawful activities. These included erroneous car repossession, duplicate billing for insurance fees, the incorrect deployment of starter interrupt devices (SIDs) to disable borrowers’ vehicles, and the failure to send millions in refunds to its consumers.
After USASF declared bankruptcy and failed to respond to the action, U.S. District Judge Victoria M. Calvert ruled in favor of the CFPB on November 26, 2024. Judge Calvert found the firm guilty for many federal law violations and ordered USASF to pay $25.5 million in compensatory damages, $5.8 million in restitution, $1.27 million in prejudgment interest, and a $10 million civil penalty. In addition, a permanent injunction was given to prohibit the corporation from committing future CFPA violations.
According to court papers, USASF’s policies emotionally affected its consumers while also causing financial losses. The company’s fraudulent use of SIDs occasionally left customers without a vehicle; meanwhile, many people’s financial woes were aggravated by improper repossessions and exaggerated insurance rates.
Senior CFPB analyst Christopher Kulka’s expert testimony during the proceedings highlighted the severe emotional and financial impact on affected consumers, allowing the court to assess the damages awarded.
Even if USASF declares bankruptcy in August 2023, the court’s ruling highlights a strong hostility to unethical corporate practices in the car lending market. The fines imposed are viewed as a significant deterrent, intended to discourage other corporations from breaching similar policies. The ruling will be implemented through ongoing bankruptcy proceedings, in which federal law will be used to address and rank specific claims made by the corporation’s creditors.
Aside from providing closure to those affected by USASF’s policy, this case underlines the need of enforcing consumer protection regulations.
