AG Racine Announces Santander Will Provide $2 Million In Relief To District Consumers For Unfair, High-Risk Auto Loans

34-State Settlement Provides Restitution and Debt Relief to Over 1,400 District Car Buyers

WASHINGTON, D.C. Attorney General Karl A. Racine today announced a $550 million multistate settlement with Santander Consumer USA, Inc. (Santander) for making unfair and high-risk auto loans to consumers nationwide. The 34-state settlement resolves allegations that Santander violated consumer protection laws by exposing over 1,400 subprime District car buyers to unnecessarily high levels of risk and knowingly placing these consumers into auto loans with a high probability of default. Under the settlement, Santander is required to provide District consumers over $265,000 in restitution and at least $1.7 million in debt forgiveness. Santander is also required to institute new underwriting policies to protect consumers and prevent high-risk auto loans.

“Santander aggressively and unlawfully pursued profits by steering District consumers into unaffordable high-interest auto loans,” said AG Racine. “This settlement will provide financial relief to District consumers who were preyed upon by Santander and require the company to institute policies that protect other car buyers from high-risk loans.”

Santander is an Illinois-based consumer finance corporation that specializes in vehicle financing. The company makes direct loans to consumers and purchases installment loan contracts from auto dealers. Santander is one of the largest players in the subprime auto lending market, an industry that profits by authorizing high-interest loans to consumers with no credit or bad credit.

The Office of the Attorney General (OAG) alleges that Santander systematically engaged in deceptive and misleading practices in violation of the District’s Consumer Protection Procedures Act. In March 2015, the state coalition opened an investigation into Santander after receiving an increase in consumer complaints related to subprime auto loans. The coalition alleges that Santander knew that certain loan applicants were likely unable to afford an auto loan, but still exposed them to risky loans with high loan-to-value ratios, significant fees, and high payment-to-income ratios. In fact, the coalition alleges that in many cases Santander pursued profits by underestimating the risk of loans from auto dealers with a history of falsifying consumer income and expense information. Finally, the coalition alleges that Santander engaged in deceptive servicing practices and actively misled consumers about their rights and risks of partial payments and loan extensions.

Under the settlement, Santander is required to provide relief to borrowers and put in place certain measures to protect consumers from high-risk loans. Specifically, Santander must

  • Pay $267,112 in restitution to borrowers: Santander will pay $267,112 for restitution to certain subprime consumers who defaulted on loans between January 1, 2010 and December 31, 2019. Consumers eligible for payments from the settlement will be contacted by Rust Consulting, the Settlement Administrator for this matter. Consumers with questions about settlement eligibility should contact OAG’s Office of Consumer Protection by calling (202) 442-9828 or emailing
  • Provide $1,735,000 in debt relief to borrowers: For debt still owned by Santander, the company is required to provide $1,735,000 in debt relief to its borrowers.
  • Attempt to buy back and forgive $1,215,000 in borrower debt: From 2013 to 2017, Santander sold $1,215,000 in debt to third-party debt collectors. For this off-book debt, the company is required to attempt to purchase these loans back to provide debt relief to borrowers, and in cases where it is unable to do so, is required to provide an explanation as to why it could not.
  • Institute policies that protect borrowers from high-risk loans: Going forward, Santander cannot extend financing if a consumer’s monthly expenses are higher than their income. Santander will also implement steps to monitor dealers who inflate consumer income or deflate consumer expenses to secure loans for car buyers and require documentation from those dealers. Further, Santander will maintain company-wide policies and procedures for deferments, forbearances, modifications, and other collection matters.
  • Pay $30,000 to the District: Santander is required to pay $30,000 directly to the District of Columbia.

A copy of the settlement is available at:

Joining Attorney General Racine in the settlement led by Illinois Attorney General Raoul are the Attorneys General of California, Maryland, New Jersey, Oregon, and Washington, who comprise the executive committee; as well as the Attorneys General of Arizona, Arkansas, Connecticut, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, West Virginia, and Wyoming.