For Immediate Release
June 13, 2016
Richmond, Virginia – The The KMX Collective – an organization of CarMax employees – has filed complaints with the Consumer Financial Protection Bureau and 37 State Attorney Generals alleging they were being forced to sell automobile financing in violation of federal and state Unfair and Deceptive Trade Practices statutes.
The complaints allege that in 18% of its 500,000/year automobile sales CarMax – without disclosing to those customers – kicks back $1,000 to their Tier 3 automobile loan lenders to induce those lenders to make an automobile loan when, without the kick-back, prudent banking would prohibit such a loan. By this practice, the customer – without knowing it – is paying both a $1,000 more for an automobile than a fair market price and an A.P.R of 24% on the $1,000 that CarMax is immediately kicking-back to the lenders.
This predatory lending practice essential interferes with the customer’s ability to understand: (i) the material terms, costs, and conditions of an automobile loan and (ii) takes unreasonable advantage of customers’s lack of understanding about the costs of the loan by withholding complete cost information during the application process.
The CFPB has opened an investigation pending as Case number: 160519-001625.
For More Information Contact: [email protected] (202-643-7232)
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