May 3 The Consumer Financial Protection Bureau
(CPFB) expanded its probe into the car loan industry by issuing
subpoenas to auto lenders over the sale of financial products
like extended warranties, the Wall Street Journal reported on
Thursday, citing people familiar with the investigation.
The consumer bureau is investigating whether terms and
prices for auto loans, as well as additional products like extra
insurance, are properly disclosed. The probe follows a similar
investigation into deceptive marketing practices by credit card
companies, the Journal said.
The CPFB, a regulator that was created by the 2010
Dodd-Frank financial law and given authority over mortgages,
credit cards and other products, has not yet decided if it will
investigate the financial arms of large auto makers like Toyota
and Ford but does have the authority to fine them
if it decides they have broken the law, the Journal said, citing
The U.S. Justice Department will also investigate car
dealerships that give loans to customers with poor credit
ratings at a high rate of interest, the Journal said citing
comments by Jon Seward, deputy chief of the department's housing
and civil-enforcement section.
The CPFB warned auto lenders against high interest loans in
March, saying that the practice discriminates against certain
Dealers often attach higher markups to loans made to
African-American and Hispanic borrowers, according to research
by the consumer bureau.
The CPFB could not be reached for comment by Reuters outside
of regular business hours.