In the latest example of insurance watchdogs keeping insurers honest is the settling of the auto-loan scandal that has been plaguing Satander Bank for the last few months. Santander Consumer USA Holdings Inc., is a leading subprime auto lender that recently settled an auto-loan dispute for $11.8 million.
Satander was accused of misleading customers about the cost and terms of certain auto insurance loans. Rather, than go to court, Satander decided to Settle for millions, which usually indicated that they did what they have been accused of doing. Though, it is worth noting that by settling Satander did not legally admit guilt.
Apparently, Satander was promising customers lower monthly premiums by offering an option to make interest-only payments. What they did not do was explain to those customers that by only paying interest every month, they were actually significantly increasing the total cost of their policy. That put more money in Satander’s pockets, while customers thought they were getting a deal.
Not only that, but it was also found that Satander was misleading customers about their guaranteed auto protection (GAP) policy. The lender marketed that policy has fiscal protection should your car get totaled. What it did not explain to customers is the fact that the policy has a cap on its coverage. That means that, depending on the cost of your vehicle, the policy you thought would pay for a new car, would, in fact, not cover the total costs.
Satander released a statement about the settlement, saying that ““We are pleased to put this matter behind us…Strengthening compliance and consumer practices has been a key focus of ours.”.
Misleading marketing campaigns and shady business practices should be a thing of the past, but the reality is that many companies still utilize them. In the insurance world, these poor practices can ruin someone’s life. As a consumer, it is important to always take the time to research any company you are considering doing business with, particularly when it comes to insurance.
If you have any questions about your current auto policy, or want to inquire about a new one, reach out to TGS Insurance at www.tgsinsurance.com.