WASHINGTON (Legal Newsline)—Herbies Auto Sales in Greeley, Colorado will pay $700,000 in restitution to consumers because of allegations its financing schemes were abusive, the Consumer Financial Protection Bureau (CFPB) announced recently.
Y King S Corp., which does business as Herbies Auto Sales, is a buy-here pay-here used car dealer that offered financing to approximately 1,000 people annually from 2012 through May 2014.
The company allegedly advertised a misleading 9.99 percent annual percentage rate (APR) without mentioning a required warranty, a payment reminder device or other credit costs as finance charges. As a result, consumers allegedly thought they would get a 9.99 percent APR when in reality their APR was much higher.
“Buying a car is often one of the most important purchases a consumer makes, so the experience needs to be fair and above-board,” CFPB Director Richard Cordray said. “But concealing finance charges and the real cost of credit, as Herbies did here, is unlawful and unacceptable.”
According to the CFPB allegations, Herbies violated both the Truth in Lending Act, and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.
In addition to the restitution, Herbies received a suspended civil penalty of $100,000.