A.G. Schneiderman Stops Buffalo Car Dealership From Illegal Lending Practices
Western NY Dealership Was Not Licensed to Issue Car Loans, But Did So Anyway
Schneiderman: Consumers Were Left With Very Little Protection or Recourse Should Something Go Wrong
BUFFALO - Attorney General Eric T. Schneiderman today announced that his office has stopped Master Motors of Buffalo, Inc. from unlawfully issuing their own loans to consumers. The auto dealership is not licensed to do so by the New York State Banking Department. Master Motors has agreed to stop the practice and pay a $25,000 fine.
"Master Motors acted as its own lending institution leaving consumers with very little protection or recourse should something go wrong," said Attorney General Schneiderman. "Unlicensed sales finance companies cannot operate under the radar with absolutely no oversight. It's harmful to New York's consumers."
The investigation, which began in May 2010, discovered Master Motors was violating Article 11-B of the Banking Law by holding retail installment contracts of $25,000 or more without being licensed by the Banking Department. Over 150 consumers signed contracts with the dealership and are currently paying off their loans. Those existing loan contracts will be monitored by the Attorney General's office and the Banking Department.
As a result of the Attorney General's investigation, Master Motors entered into an agreement called an Assurance of Discontinuance. The agreement bars the dealership from entering, renewing, modifying, or extending any existing retail installment contracts. If a consumer defaults on a contract and the vehicle is repossessed by Master Motors, the dealership is barred from seeking judgment against the consumer.
Licensing protects consumers from companies that have not shown that they possess the character, fitness and experience to handle retail installment contracts and the confidential information given to them by consumers, such as social security numbers, bank account information, and employment information. Licensing allows for oversight and helps ensure that consumers are treated fairly, and in the manner required by law. If a licensed company violates the rights of consumers, it will be subject to review by the proper law enforcement agency.
The Attorney General also thanked the Banking Department for its cooperation on this matter.
The investigation was handled by Assistant Attorney General James Morrissey under the supervision of Attorney General In-Charge for the Buffalo Regional office Michael Russo.