In response to an order issued Thursday by the Consumer Financial Protection Bureau, U.S. Bank said it remains committed to supporting the military.
On Thursday, the CFPB said it charged the bank and Dealers’ Financial Services for failing to properly disclose all the fees charged to participants in the companies’ Military Installment Loans and Educational Services auto loan program and for misrepresenting the true cost and coverage of add-on products financed along with the auto loans.
The CFPB said both U.S. Bank and DFS agreed to pay a total of nearly $6.5 million to more than 50,000 service members for violating the Truth in Lending Act and federal laws that prohibit deceptive marketing and lending practices.
Service members who had outstanding MILES loans between Jan. 1, 2010 and June 27, 2013 may receive restitution under Thursday’s orders, the CFPB said.
In an email to Credit Union Times, Teri Charest with U.S. Bank corporate public relations, said “While we are not being fined by the agency, we are reimbursing a $3 monthly fee that certain customers paid to a third-party processor for servicing their automatic payments.”
The bank also said “because the CFPB felt some of the disclosures on the timing of when customer payments were being applied to their loans were insufficient, we are also crediting a portion of the interest payments to those borrowers.”
“We take seriously the CFPB’s concerns regarding these disclosures and certain marketing materials used in conjunction with the MILES program,” Charest wrote. “At U.S. Bank, we have high expectations for ourselves and our company’s product offerings, and we apologize for any confusion this program may have caused our customers.”
U.S. Bank said it intends to exit the MILES loan program choosing to build an “original objective of financial education, and we will continue to offer and further expand the educational component of the program, broadening the content and extending access to all military service members.”
U.S. Bank partnered with the MILES program through DFS more than a decade ago to help junior military personnel, with little to no credit history, to obtain affordable rate auto loans and to receive valuable financial education prior to purchasing their first automobile, Charest said.
“At U.S. Bank, ownership, accountability and service to all of our customers, especially our military service members, is at the heart of what we do,” Charest wrote. “We have a very strong track record of support for military service members.”