Settlement calls for $9.3 million in redress – but bureau shrinks that amount by 90%, adds $1

Misleading statements about what customers in an auto payment program would pay have earned the Florida company that ran the program and its owner a settlement with the consumer financial protection agency over charges of deceptive sales practices, the agency said Friday.

But it’s less clear what that settlement will cost the company and its owner.

The Consumer Financial Protection Bureau (CFPB) said it found that the disclosures and advertisements of the auto loan payment program run by the Florida firm and its owner — U.S. Equity Advantage, Inc. (“USEA”), a nonbank, and Robert M. Steenbergh – contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices.

The bureau said Steenbergh is the founder, sole-owner, and chief executive officer of USEA.

The consent order reached with the firm and its owner, the bureau said, imposes a judgment against the firm and Steenbergh requiring them to pay $9.3 million in consumer redress for the estimated 100,000 customers affected; the order also contains requirements to prevent future violations.

However, the bureau indicated that actual penalties faced by firm and owner would be one-tenth of what the consent order states.

“The ordered redress amount is suspended upon payment of $900,000 and a $1 civil money penalty to the Bureau,” the agency said in a release. The reason: the company and its owner can’t pay more.

“The suspension of the full payment for redress, as well as the $1 civil penalty, is based on USEA’s and Steenbergh’s demonstrated inability to pay more based on sworn financial statements,” the bureau stated.

The agency asserted that consumers harmed by USEA and Steenbergh may be eligible for additional relief from the CFPB Civil Penalty Fund. “If victims cannot be located or it is otherwise not practicable to pay victims, the Bureau will keep the money in the Fund for victims in future cases rather than the money being sent to the Treasury,” the agency said.

Regarding the alleged violation: CFPB said the auto loan payment program called AutoPayPlus, charged fees to deduct payments from consumers’ bank accounts every two weeks and then forwarded those payments every month to the consumers’ lenders. The agency said it found that USEA and Steenbergh misrepresented the amount consumers would save when disclosing the program’s benefits by not including a $399 enrollment fee in the calculations presented to consumers.

“USEA and Steenbergh created the misleading impression that consumers would save money using its product, when in fact, because of the enrollment fee, the program’s costs ordinarily exceeded any savings,” CFPB said.

The agency added that it also found USEA and Steenbergh stated in advertising that they have helped “hundreds of thousands of customers save $29 million or more in interest by participating in AutoPayPlus when they had no basis for making this claim, and when the program had, in fact, not saved consumers that amount.”

The bureau said the consent order prohibits USEA and Steenbergh from making any misrepresentations about its payment programs. It also requires them to account for the total costs for its payment programs, as well as the net savings or costs after deducting any fees, whenever they make claims about savings or financial benefits.

Consumer Financial Protection Bureau Settles with U.S. Equity Advantage, Inc. and Its Owner, Robert M. Steenbergh, for Deceptive Sales Practices