RACINE, Wis. – A complaint from the auto dealers lobby has caused state credit union regulators to order Educators CU to cease its successful used auto sales.
The order issued last month by the Office of CUs found the $900 million credit union’s used auto sales as impermissible under the state’s credit union statute, which explains that activities undertaken by state charters must be "routine daily operations of credit unions". The order will not prevent the credit union from selling repossessed vehicles or those coming off lease from credit union members.
The state’s third largest credit union appealed the state’s ruling on Monday, insisting that state officials gave their express consent to the used auto sales when the Department of Transportation issued a dealer’s license to sell used vehicles in 2002. Since then, Educator’s has sold over 2,000 used vehicles. In addition, credit union officials say they have been filing annual call reports detailing the results of its vehicle sales to state regulators during that time.
But the state auto dealers see the credit union’s sales as unfair competition, making potential buyers captive borrowers, and its chief state lobbying group, the Wisconsin Automobile and Truck Dealers Association filed a complaint with the state regulators challenging the legality of the sales.
The state order comes at a time when the credit union is in the process of building a $7 million call center, which will house its auto sales operations.
