More than 1,700 state residents to get about $225 each from Santander.
Lender allegedly targeted risky auto loan consumers
More than 1,700 Connecticut residents are eligible for restitution in a multistate settlement with a lender accused of targeting risky borrowers likely to default.
The settlement resolves allegations that Santander Consumer USA Inc. violated consumer protection laws by exposing subprime consumers to unnecessarily high levels of risk and knowingly placing into auto loans consumers who had a high probability of default, Connecticut Attorney General William Tong said.
“For years, Santander put Connecticut borrowers at financial risk,” he said.
Tong said 1,740 Connecticut residents are entitled to restitution of about $225 each.
Santander will pay $65 million to 34 participating states for restitution for certain subprime consumers who defaulted on loans between Jan. 1, 2010, and Dec. 31, 2019. Connecticut’s share is $30,000.
The total $550 million settlement includes debt Santander is forgiving or not collecting, a spokeswoman said.
Santander said it has strengthened risk management and improved policies and procedures “to identify and prevent dealer misconduct and tightening standards to ensure affordability.”
The Illinois attorney general’s office led the investigation in response to a rising number of consumer complaints related to subprime auto loans. The settlement includes “significant loan relief ” for customers and a prohibition against similar actions, Tong said.
Santander is required to factor in a consumer’s ability to pay the loan. 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 also will pay up to $2 million for the settlement administrator of restitution claims and an additional $5 million to the states.