WASHINGTON–Credit unions across the country may wish to warn their members over potentially problematic financing being offered by auto repair shops, according to a new report.
The report released by the “Stop The Debt Trap” coalition, has found many auto repair shops are offering predatory loans through EasyPay Finance and Transportation Alliance Bank (TAB Bank) that “promise no interest if paid in 90 days but end up carrying annual interest rates up to 189% – even in states where a rate that high is illegal,” according to the coalition.
The coalition noted the report highlights some of the hundreds of complaints detailing deceptive and abusive practices concerning loans by EasyPay Finance, its parent company Duvera Billing Services, and Utah-based bank, TAB Bank, “which helps EasyPay evade state laws. EasyPay Finance loans are available at auto repair and tire shops around the country.”
The Stop the Debt Trap Coalition said numerous major chains offer the financing option, including AAMCO, Big O Tires, Grease Moneky, JiffyLube, Meineke, Midas and Precision Tune Auto Care.
‘Beware the Fine Print’
Separately, the National Consumer Law Center also released a Consumer Alert about the loans that warns consumers to “beware of the fine print that could disguise costly loans at rates up to 189%.”
The organization noted advocates urge consumers to avoid any loan above 36% APR including fees, and that if caught in an EasyPay Finance loan, consumers should file a complaint with the CFPB and state regulators, opt out of the forced arbitration clause, and consult a lawyer.
“Loans at 189% are illegal in most states, but TAB Bank is helping EasyPay Finance evade those laws and multiply the pain of an expensive car repair,” said Lauren Saunders, associate director at the National Consumer Law Center.
In releasing its report, the coalition described TAB Bank as one of “only a few rogue banks willing to front for predatory lenders. The bank, which is chartered in Utah and supervised by the FDIC, helps EasyPay Finance (owned by Duvera Billing Services) charge up to 189% on loans offered through stores nationwide, including auto mechanics, furniture stores, and pet stores offering predatory puppy loans. In states that have outlawed predatory interest rates, EasyPay Finance launders its loans through TAB Bank so that it can charge high interest rates that it cannot legally charge as a non-bank lender. In other states, it makes the loans directly.”
Other organizations that are part of the coalition include the Consumer Federation of America, the Center for Responsible Lending and Americans for Financial Reform.
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