CFPB Takes First Action Against BHPH Dealer
WASHINGTON — Today, the Consumer Financial Protection Bureau (CFPB) took its first action against a buy-here, pay-here (BHPH) dealer. DriveTime Automotive Group was ordered to pay an $8 million civil penalty as well as end its unfair debt collection tactics, fix its credit reporting practices, and arrange for harmed consumers to obtain free credit reports.
“Consumers who purchase a car at a buy-here, pay-here dealer deserve to be treated fairly,” said CFPB Director Richard Cordray in a statement. “DriveTime harassed and harmed countless consumers, many of whom were economically vulnerable. Our action today forces DriveTime to pay the price for its illegal debt collection tactics and for neglecting the accuracy of consumers’ credit information.”
Arizona-based DriveTime and its finance company, DT Acceptance Corporation, make up the largest BHPH dealer in the nation. DriveTime’s average customer has an annual income of $37,000 to $50,000 and has a FICO score between 461 and 554. It operates 117 dealerships in 20 states and, as of Dec. 31, 2013, held more than 150,000 outstanding auto installment contracts.
According to the CFPB, at least 45% of DriveTime’s auto installment contracts were delinquent at a given time. When a consumer fell behind on his or her installment payment, one of DriveTime’s 290 collection employees in two domestic call centers and 80 contractors in Barbados would begin calling the consumer — resulting in tens of thousands of collection calls being made each weekday. At the end of 2013, DriveTime had approximately 69,000 installment contracts past due that these employees would have been calling about.
The CFPB determined that several of DriveTime’s debt collection practices were unfair to consumers and violated the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). According to the bureau, DriveTime employees harassed borrowers at work, a practice that was encouraged by DriveTime management. In one case, a consumer was called 30 times at work, even after making a do-not-call request.
DriveTime also requires consumers to provide the names and phone numbers of at least four references when they applied for financing. When consumers fell behind on their payments, DriveTime called these references excessively. The dealer group also used third-party databases to find the phone number of consumers who fell behind in payments, often resulting in frequent phone calls to wrong numbers.
The CFPB also found that DriveTime gave credit reporting agencies information that inaccurately reflected the timing of repossessions and dates of first delinquencies — a practice which is prohibited by the Fair Credit Reporting Act (FRCA). .
The bureau also said DriveTime mishandled consumers’ complaints about the inaccurate information it had provided to the credit reporting agencies. In several instances, consumers disputed the same account information several times without the inaccurate information being corrected. In other cases, DriveTime informed consumers in writing that the information had been corrected, when it had not been — a violation of the FCRA.
Additionally, the bureau charged DriveTime with failing to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to credit reporting agencies.
More Industry

Ownership Priorities are Shifting
A new survey shows that in the U.S. vehicle quality for generation Z is largely defined by advanced safety features, intuitive technology and premium sound systems.
Read More →
Pump Price Jump Calculated
ISeeCars.com examined fuel costs for different power trains, finding which ones have experienced the biggest hits since the war in Iran commenced.
Read More →
Black Book: Weekly Market Update
Wholesale values fell last week despite the spring season still being in the traditional full-gear mode, analysts said.
Read More →
Arkansas Auto Group Acquires First Indiana Rooftop
Performance Brokerage Services represented both the buyer and seller in the sale of Carver Toyota of Columbus by Carlock Automotive Group.
Read More →
Stellantis to Dive Into U.S. Lending
The multinational maker of Chrysler, Dodge, Jeep, Ram and multiple other brands received conditional approvals for a Utah-based industrial bank.
Read More →
New-Vehicle Prices Rise
With April sales down, higher prices on in-demand large vehicles helped inflate the overall ATP, though increases were under long-term averages, Cox Automotive reported.
Read More →
Black Book: Weekly Market Update
Last week in the wholesale automotive market proved to be a mixed bag, analysts reported.
Read More →
Black Book: Weekly Market Update
Conversion rates were flat last week at 63%, Black Book analysts calculated, as low-mileage and almost-near units outpaced the overall market.
Read More →
EU Auto Association Urges Action
Trade relations between the European Union and the U.S. are at risk, causing the European Automobile Manufacturers Association to push lawmakers to make a decision.
Read More →
Driving into the Super CFC Era
Understanding the risks and benefits of retail accounting and Super CFCs can help you better present options to your dealer partners.
Read More →