The Federal Trade Commission Thursday announced a settlement with a national subprime auto lender and debt buyer/collector that will see the company pay $5.5 million in penalties, refunds, and account adjustments. The charges relate to the firm’s collection practices on its own accounts and loans it was servicing as a third party.

Consumer Portfolio Services, Inc. (CPS), headquartered in Irvine, Calif., agreed to refund or adjust 128,000 consumers’ accounts more than $3.5 million and forebear collections on an additional 35,000 accounts to settle charges the company violated the FTC Act. CPS will pay another $2 million in civil penalties to settle FTC charges that the company violated the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA)’s Furnisher Rule.

The FTC alleged that CPS’s collection violations included disclosing the existence of debts to third parties; calling consumers at work when not permitted or inconvenient; calling third parties repeatedly with intent to harass; making unauthorized debits from consumer bank accounts; falsely threatening car repossession; and deceptively manipulating Caller ID.

Because for many of its accounts CPS is a creditor, the complaint charges these practices violated Section 5 of the FTC Act. For those accounts where CPS is a debt collector, the complaint charges these practices violated the FDCPA.

In a statement provided to, CPS said that it cooperated with the investigation and is glad to put the issue to rest.

“We are pleased to have resolved the matter with the FTC,” said Charles E. Bradley, Jr., President and Chief Executive Officer.  “We cooperated fully with the FTC during their inquiry and made several system and procedural changes related to their comments. Furthermore, we are pleased that the final settlement is consistent with our expectations. Accordingly, the amounts we’ve agreed to pay for customer refunds and the civil penalty are covered entirely by the legal provision expenses we’ve previously recognized.”

CPS is publicly traded on the NASDAQ stock exchange under the ticker symbol CPSS. The company provides indirect automobile financing to consumers with poor credit and also purchases retail installment sales contracts primarily from franchised automobile dealerships.

In an unrelated move, the Consumer Financial Protection Bureau (CFPB) recently disclosed that it is pursuing rules for defining larger participants in the auto finance industry. Once that rule is in place, the CFPB will be able to regulate and supervise auto lenders in the same way as many other financial markets.


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