InfoBytes Blog
District Court grants preliminary approval to national bank's auto lending settlement
On August 5, the U. S. District Court for the Central District of California granted preliminary approval and class certification to a settlement of at least $393.5 million to resolve multidistrict allegations that a national bank added force-placed auto insurance to auto loans that may have been unnecessary and without borrowers’ consent. Under the terms of the settlement, the auto insurance underwriter will pay an additional $7.5 million. The allegations stem from a 2017 lawsuit in which borrowers claimed the bank charged them for unnecessary collateral protection insurance. The settlement also requires the bank and the underwriter to pay up to $36 million in attorneys’ fees for the borrower class and up to $500,000 in litigation expenses. However, the court scheduled a settlement fairness hearing for October to examine the fees before granting final approval of the settlement. This settlement follows a 2018 settlement reached between the bank and the CFPB and the OCC concerning a similar set of allegations over the purported billing of force-placed insurance premiums that may not have been required. (See previous InfoBytes coverage here.)