I simply could not pursue the claims individually in arbitration because it was not economically feasible to do so,” said Michael Donovan, Novak’s attorney. Novak’s amended contract, my hands were tied. “Given Concepcion, once we discovered there was an arbitration clause in Ms. Novak from pursuing a private action for an alleged wrong doing in a court of law and serving as a class member in a class action.
The terms of the arbitration clause prevented Ms. Unfortunately, Novak did not know that an amended agreement of her auto loan, which she signed in 2009 to modify her payment terms, contained an arbitration clause and class action ban.
In March 2013, Leyna Novak, a Pennsylvania auto buyer, attempted to pursue a class action lawsuit against CitiFinancial and Santander alleging they violated the Pennsylvania Motor Vehicle Sales Finance Act (MVSFA) by imposing the added unauthorized fees. (CitiFinancial) and Santander Consumer USA (Santander) that allegedly charged additional fees ranging from $10 to $15 for each telephonic or on-line payment without any prior disclosure of the charges in the car finance contract. This was the case with CitiFinancial Auto Corp. Worse, some finance companies solicited and encouraged borrowers to make telephonic or on-line payments without disclosing the additional “convenience” charges. A number of car finance companies appear to have flouted this law by imposing, “convenience” charges for making a loan payment by phone or on-line, despite the fact that their contracts did not specify any charge for such a payment. Several states, including Pennsylvania, require that all finance charges for a car loan must be specified in a single contract. Here’s one consumer’s experience with an auto finance company and the terms in the fine print:Ĭlaims Against Auto Financing Company for “Convenience” Charges Could Not Be Pursued As a Class Action. The CFPB is also studying the use of forced arbitration in auto financing and other consumer financial products and services. Today, the Consumer Financial Protection Bureau is holding a field hearing in Indianapolis to discuss auto financing and address consumer concerns in the auto lending market.
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