The Consumer Financial Protection Bureau (CPFB) expanded its probe into the car loan industry by issuing subpoenas to auto lenders over the sale of financial products like extended warranties, the Wall Street Journal reported on Thursday, citing people familiar with the investigation.
The consumer bureau is investigating whether terms and prices for auto loans, as well as additional products like extra insurance, are properly disclosed. The probe follows a similar investigation into deceptive marketing practices by credit card companies, the Journal said.
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The CPFB, a regulator that was created by the 2010 Dodd-Frank financial law and given authority over mortgages, credit cards and other products, has not yet decided if it will investigate the financial arms of large auto makers like Toyota and Ford but does have the authority to fine them if it decides they have broken the law, the Journal said, citing agency officials.
The Justice Department will also investigate car dealerships that give loans to customers with poor credit ratings at a high rate of interest, the Journal said citing comments by Jon Seward, deputy chief of the department's housing and civil-enforcement section.
The CPFB warned auto lenders against high interest loans in March, saying that the practice discriminates against certain minorities.
Dealers often attach higher markups to loans made to African-American and Hispanic borrowers, according to research by the consumer bureau.
The CPFB could not be reached for comment by Reuters outside of regular business hours.
(Reporting by Tej Sapru in Bangalore; Editing by David Cowell)