New York's top banking regulator, Benjamin Lawsky, is suing a Long Island subprime auto lender for allegedly refusing to refund customers money that they were owed and failed to protect confidential customer information.
In a complaint filed Wednesday in a Manhattan U.S. district court, the head of New York's Department of Financial Services accused Condor Capital Corp. and its owner, Stephen Baron, of engaging in unfair and abusive practices and has asked the court to appoint a receiver to take over the lender's operations.
Condor, which buys and services auto loans to customers in New York and more than two dozen other states, caters to borrowers with tarnished credit histories. The lawsuit accuses Condor and Baron of refusing to provide refunds to customers who had overpaid their loans, traded in a car and received a credit greater than the amount they owed or had a positive credit balance for other reasons.
These practices violate the Dodd-Frank Act, according to the complaint. The lawsuit marks the first time that a state regulator has taken legal action against a company for Dodd-Frank violations in federal court, according to a Wednesday press release from the DFS.
"Thousands of Condor customers have positive credit balances which Condor has maintained a 'policy' of failing and refusing to refund," the lawsuit says. Condor allegedly sought to prevent customers from realizing that they were owed refunds by cutting off their access to online accounts once their loans have been paid off, according to the complaint.
Condor and Baron also failed to protect confidential customer information, according to the lawsuit. DFS examiners found "stacks of hundreds of hard-copy customer loan files lying around the common areas of Condor's offices," according to the press release. The company has also neglected to ensure the security of its information technology systems, according to the release.
Lawsky's office also said that Condor has harassed and threatened customers over payments; reported inaccurate information to credit agencies; imposed fees or late charges where none were appropriate; and made unauthorized charges to customers' credit cards or unauthorized withdrawals from bank accounts.
A Condor representative declined to comment on the charges.
Lawsky's office is seeking an unspecified amount of restitution for Condor customers. A court hearing on its request for a preliminary injunction is scheduled for April 29.