An Ohio-based auto lender that has already been penalized for $3.28 million for using aggressive debt collection tactics against members of the armed forces is once again in hot water with the Consumer Financial Protection Bureau for failing to issue refunds to the servicemembers that were harassed. 

The CFPB announced today that it has hit Security National Automotive Acceptance Company (SNAAC) with a $1.25 million fine for violating several terms of its Sept. 2015 consent order, including allegedly failing to provide more than $1 million in refunds.

To understand today’s order [PDF], let’s back up to the CFPB’s original complaint against SNAAC, which specializes in lending money to active-duty and former military to buy used motor vehicles in more than two dozen states.

The CFPB claimed that since July 2011 SNAAC collected millions of dollars from thousands of servicemembers who defaulted on their loans by using aggressive collection tactics that took advantage of borrowers’ special obligations to remain current on debts.

Among other tactics, the Bureau claims that in order to collect on debts, SNAAC routinely threatened to contact servicemembers’ superiors and exaggerated the potential impacts on their careers if they remained delinquent on their loan obligations, often telling borrowers they could face demotion, loss of promotion, discharge, denial of re-enlistment, loss of security clearance, or reassignment.

SNAAC reportedly buried a provision within the fine print of contracts saying that it could contact commanding officers about servicemembers’ debts. When customers were unable to pay their debts, the company suggested that the servicemembers were in violation of military law and other regulations and threatened to notify their commanding officers about the purported violations.

To resolve these allegations, the CFPB issued a consent order requiring SNAAC to pay $2.28 million to thousands of harmed servicemembers and other consumers.

The amount that each borrower was to receive would have corresponded to the amount of debt they were allegedly unlawfully pressured into paying. A written compensation plan was to be submitted to the CFPB for approval.

This, according to the CFPB’s new action, did not happen.

In fact, the Bureau found that instead of proving refunds to consumers with settled-in-full or bankrupted accounts, the company issued worthless credits. These credits provided account holders with no actual benefits as they no longer owed the company anything and could not use the credit toward a new or existing loan.

Additionally, the company failed to properly give redress to consumers who were still making payments.

For instance, the Bureau claims that some SNAAC customers were making payments under a settlement agreement. However, when providing these customers redress, SNAAC allegedly based the refunds on the original, higher account balance.

As a result, the CFPB found that the company issued credits that exceeded consumers’ settlement balances. Because their settlement balances were then improperly credited, some consumers unwittingly overpaid SNAAC to settle their accounts.

Under today’s consent order, the CFBP ordered SNAAC to pay $720,000 in refunds to 925 account holders, issue $370,000 in new credits to more than 1,000 consumers with remaining balances, and properly credit 1,000 accounts where payments were misapplied.

Additionally, the company must pay a $1.25 million penalty to the CFPB’s Civil Penalty Fund, this is on top the original $1 million fine the company was ordered to pay in 2015.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.