Schneiderman settles auto loans suit
BUFFALO, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced on Friday that his office has reached an assurance of discontinuance agreement with a Buffalo auto dealership that allegedly issued loans.
Master Motors of Buffalo Inc. allegedly issued unlawful loans to consumers, as the auto dealership is not licensed to do so by New York State Banking Department. The dealership agreed to stop the practice and pay a $25,000 fine.
As part of the agreement, the dealership may not enter, renew, modify or extend any retail installment contracts. The dealership is also barred from seeking judgment against any consumers who default on a contract once Master Motors has repossessed the vehicle.
"Master Motors acted as its own lending institution leaving consumers with very little protection or recourse should something go wrong," Schneiderman said. "Unlicensed sales finance companies cannot operate under the radar with absolutely no oversight. It's harmful to New York's consumers."
More than 150 consumers allegedly signed contracts with the dealership and are currently paying off their loans. The contracts will be monitored by Schneiderman's office and the state's banking department.
The banking department requires licensing organizations that give loans to protect consumers against companies that have yet to show they possess the character, fitness and experience to handle retail installment contracts and the confidential information given to them by consumers. Licensing ensures consumers are treated in a fair and lawful way.