Regulators Scrutinize Auto Lenders Over Add-Ons

May 16, 2013

The Consumer Financial Protection Bureau has issued subpoenas to U.S. auto lenders over the sale of extended warranties and other financial products, according to people familiar with the investigation, expanding a civil probe that lenders say could slow the booming car-loan industry.

Any new restrictions could affect millions of Americans who use loans to buy new and used vehicles each year.

Add-on products, such as extra insurance, are a popular mechanism used by car dealers to boost profits.

Though such products are legal, regulators are probing whether terms and prices are adequately disclosed.

The CFPB has pursued a similar strategy with credit card companies, fining them over the use of deceptive marketing practices to sell products like identity-theft protection.

Story by Robin Sidel and Alan Zibel for the Wall Street Journal.

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