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Monday, February 24, 2020

Worthless auto loan insurance add-on prompts class action vs auto loan finance company

By Dana Herra | Sep 3, 2015

A Chicago woman has filed a class-action lawsuit against the finance company that handled her car loan, claiming she was misled into buying a useless contract addendum.

In the complaint filed Aug. 31 in federal court in Chicago, plaintiff Joyce Pettye is suing Fort Worth, Texas-based Santander Consumer USA Inc., claiming the company violated the Truth in Lending Act and the Illinois Motor Vehicle Retail Installment Sales Act.

According to court documents, Pettye bought a 2012 Ford Focus in March from Al Piemonte Super Car Outlet in Northlake, and financed the purchase through a Retail Installment Contract held by Santander. Under the terms of the contract, Pettye agreed to make 72 monthly payments at a 27.06 percent annual percentage rate. Once the finance charge and other miscellaneous charges were added to the car’s $13,000 sticker price, the total sale price came to just under $30,000.

Among the additional charges was $895 for a program outlined in a document titled “Gap Addendum.” The optional program absolves the buyer of liability for the unpaid balance of the contract in the event of a total loss, but was worthless in Pettye’s case, because it is limited to contracts with an annual percentage rate of 24 percent or less.

In her lawsuit, Pettye claims the sales staff at the dealership presented her with a stack of documents and told her to sign on every line marked by an “X.” The Gap Addendum was among the documents in the stack, and because its signature line was marked with an “X,” Pettye signed it as instructed, believing it to be part of the contract. Court documents say she was unaware that she had made a non-required purchase until she consulted with attorneys about an unrelated concern with the sale.

“Had Plaintiff been provided adequate disclosures about the nature of the Gap Addendum as an additional, non-required purchase with an $895 cost, she would not have signed [it],” the lawsuit states. “The only reason Plaintiff signed the Gap Addendum was because she was led to believe it was a mandatory form connected with her RIC.”

In addition to the claims regarding the gap program, the lawsuit says that Pettye was not provided any contract disclosures in a written form she could keep, and neither the amount financed nor the finance charge were explained to her either orally or in writing, in violation of the Truth in Lending Act. The suit also argues that the gap charges should have been calculated under the “finance charges” figure, not the “amount financed” figure.

“The true cost of credit was never disclosed to Plaintiff or any of the members of the proposed class in accordance with the TILA, and therefore they are entitled to damages,” the suit claims.

The suit has been filed as a class action and names as plaintiffs all vehicle purchasers in the state of Illinois who signed a Gap Addendum while their APR was in excess of the addendum’s limit. The class period covers the past year for the Truth in Lending Act claim and the past five years for the Illinois Motor Vehicle Retail Installment Sales Act claim. According to the lawsuit, nearly 35 percent of vehicles purchased with an RIC in 2011 included purchase of a Gap program.

Pettye is being represented by attorney Christopher V. Langone of Langone Law Firm, of Evanston, and James P. Batson of the Law Office of James P. Batson, of Chicago. The suit requests certification as a class action, damages from Santander to be determined at trial, attorney fees and costs and disgorgement of finance charges.

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Organizations in this Story

Law Office of James P. BatsonChristopher V. LangoneSantander Consumer USAAl Piemonte Super Car Outlet