Here’s what you need to know about auto payday loans
A new auto payday loan that offers an unlimited number of auto payday-loans at no interest rate could soon be on the market.
A group of investors and borrowers in the US have filed a class-action lawsuit against payday loan giant FICO against US Bank, the largest auto lender in the country, and other lenders.
The lawsuit alleges that FICO’s payday loan programs violate federal and state laws.
The suit, filed in the Southern District of New York, accuses FICO of violating the Fair Credit Reporting Act (FCRA) and the Unfair Credit Practices Act (UCPPA).
The suit also alleges that the company fails to protect borrowers from predatory payday lending practices, such as misrepresenting the borrower’s creditworthiness and making loans based on a person’s inability to pay.
FICO declined to comment.
The group of borrowers filed the lawsuit on March 7th.
In response, FICO launched a public comment period, inviting more than 100,000 comments.
In the comments, the group says FICO has failed to meet the minimum standards for consumer creditworthiness it claims to set for its payday lending programs.
The borrowers said FICO failed to protect them from predatory lending, including charging excessive fees and requiring borrowers to pay an annual fee that amounts to more than half of the loan amount.
The loan is now up for review and could be cancelled by FICO if it does not meet its minimum standards, according to the lawsuit.
The FICO lawsuit was first reported by Business Insider.