General Motors’ captive finance arm, GM Financial, has agreed to pay over $1.8 million after it allegedly violated Massachusetts consumer protection laws. It’s estimated that more than 2,000 Massachusetts residents may be eligible for compensation under the new settlement.
According to a recent report from The Wall Street Journal, Massachusetts Attorney General Maura Healey said on Monday that GM Financial had agreed to the $1.8 million payout. According to the allegations, Americredit Financial Services Inc., doing business as GM Financial, did not pay the interest required after it failed to provide consumers with refunds of guaranteed asset protection enrollment fees. Additionally, Attorney General Healey’s office alleges that GM Financial to not provide sufficient information to consumers after repossessing their vehicles.
“We hope this settlement provides relief to the thousands of borrowers who have been affected by GM Financial’s alleged actions,” said Attorney General Healey.
Per the report, guaranteed asset protection is offered as a product that limits the difference between the amount that a borrower owes on a car loan and the payment on an auto insurance claim, in the event that the financed vehicle in question is totaled. Typically, this is sold as an add-on product that is financed with the auto loan.
In other recent GM Financial news, the automaker’s captive finance arm made $2 billion during the 2021 calendar year through re-selling used vehicles that were either returned through lease expirations or through repossessions. The profits helped to grow total GM Financial profits to $5 billion, as compared to $2.7 billion the year prior.
It was also recently announced that General Motors will launch Cadillac Financial, a new Cadillac-centric financing brand that falls under the broader GM Financial captive finance arm. Cadillac Financial will provide a variety of services, including a new website, a concierge service, and Cadillac-branded customer experience teams, all of which will work to create a carefully tailored experience specific to Cadillac customers.