Consumer Car Buying Advice Blog

Judgment results in 250K in penalties and fees against Lobel Financial.

Subprime Lending

Here at Auto Credit Express, we like to think that most large subprime auto lenders, especially the national ones, will, given the current economic climate, try and work with their customers who are currently having issues with their subprime car loans.

But, as in every business, there are always a few individuals (or companies) that cast a bad light on the entire industry. Such is the case with Lobel Financial, a subprime auto lender based in California. This week, the California Attorney General’s office announced that the state had fined the lender $250,000 in penalties and fees for an “illegal campaign of harassment and intimidation” against its customers that were behind in their payments.

Here is the press release:

San Diego – Attorney General Edmund G. Brown Jr. today forced Lobel Financial, a sub-prime auto lender, to stop its “illegal campaign of harassment and intimidation” against borrowers behind in their bills.

“This company charged its customers exorbitant interest rates for car loans and then waged an illegal campaign of harassment and intimidation when they couldn’t pay up,” Attorney General Brown said. “Now Lobel must stop its abusive tactics and comply with the law.”

Lobel Financial is headquartered in Anaheim, Calif. but makes loans to customers in Los Angeles, San Diego, Sacramento, the Bay Area, the Central Valley, and other areas of the state.

Lobel provides financing to people with poor credit who purchase vehicles through used-car dealerships. The typical interest rate of their loans is between 21-23 percent. Lobel performed its own debt collection efforts when consumers failed to make the required payments.

In 2007, the California Attorney General’s Office initiated an investigation into Lobel’s debt collection practices. The investigation found that Lobel frequently violated California’s Fair Debt Collection Act by:

- Calling its customers repeatedly and allowing the phone to ring continuously;
- Calling a customer’s employer and family members; and
- Using a false name when calling.

Additionally, the company used more sophisticated “pre-texting” tactics to obtain confidential information of their customers.

For instance, Lobel deceived ATT Wireless into providing confidential telecommunications records of at least 190 California ATT customers.

Lobel also used a calling card scam to con consumers into providing their calling information. Lobel had a third-party vendor send the customer a “free” phone card; the company would then obtain information about the calls made by the customer using the calling card.

Hundreds of California consumers across the State were victimized by Lobel’s constant harassment and illegal debt collection activities.

Lobel Financial will pay $150,000 in civil penalties and $100,000 to the State for attorneys’ fees and costs.

The Bottom Line

Here at Auto Credit Express, we applaud the actions of the California Attorney General. Given the current economic crisis, it should be the job of banks and other lenders to work with their customers, as much as possible, within a climate of mutual cooperation so that both lender and customer win out in the end.

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