Lapsed Insurance License Costs CUSO $50,000

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CHATSWORTH, Calif. — An oversight has gotten Autoland in hot water with the Oregon Department of Consumer and Business Services, costing the CUSO $50,000.

But according to Jeff Martin, president of the credit union auto buying service that operates in California and Oregon, because it self-reported its lapsed insurance license and cooperated with the regulator, the fine was "significantly" less than it could have been.

"What happened is we brought the issue to the Oregon Department of Consumer and Business Services in August 2009 after a compliance audit discovered a lapse of our insurance license," Martin told Credit Union Journal. "We completed an application [for a new license] on Aug. 13, 2009, and the Department investigated."

State Regulator Takes Action

According to a stipulation, a copy of which was obtained by Credit Union Journal, the director of the Oregon Department of Consumer and Business Services took enforcement action against Autoland, which entered into the stipulation in lieu of an administrative hearing.

The document said Autoland was licensed in Oregon as a nonresident business entity insurance producer from June 15, 1999, to June 30, 2000. In addition, it had several licenses over the past 11 years as a resident business entity insurance producer.

However, Autoland was not licensed in Oregon as a business entity insurance producer from Nov. 1, 2004, to March 11, 2010. Autoland sold 476 mechanical breakdown insurance policies on behalf of three insurers to Oregon to persons residing in Oregon from Nov. 3, 2004, to Nov. 17, 2009.

Now Fully Compliant

Autoland was assessed a civil penalty of $50,000, payable to the Department of Consumer and Business Services. The date of stipulation was May 21, 2010. Payment was due by Nov. 24, 2010.

"We paid by the due date and now are fully compliant," Martin said. "These things happen and we just did the right thing to make up for it. The Department noted we were fully cooperative, and the fine was significantly less because we brought it to their attention and were cooperative."

Autoland works with approximately 200 CUs, Martin said, adding, "We are doing great. 2010 was a turnaround year. We improved our financials 93% from 2009, a heck of a turnaround."

December saw the start of "some momentum," he continued, because credit union members have more confidence about making purchases. "They believe if they have a job, they are going to have a job. There is pent-up demand for cars because people have held onto their vehicles for so long. We see more activity on sales and lending, and are optimistic about 2011 and believe it is going to be a good year."

The CUSO is owned by Telesis Community CU, California Agribusiness CU and Kinecta FCU.

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