Extension Fees
In Re Santander Consumer USA Inc.
Date: June 3, 2026
Issue: Whether Santander Consumer USA Inc. violated New York Banking Law § 350 by charging undisclosed $25 “extension fees” to auto loan borrowers.
Case Summary: Santander Consumer USA Inc. agreed to pay $675,000 to settle allegations that it violated New York Banking Law § 350 by charging auto loan borrowers undisclosed $25 extension fees.
New York Banking Law § 350 establishes strict rules to protect borrowers by regulating advertising, collateral, and the physical locations where lending businesses can operate. The law also prohibits licensed lenders from making false, misleading, or deceptive statements about the rates, terms, or conditions of loans, helping ensure that borrowers receive accurate information when obtaining credit.
The New York Department of Financial Services (NYDFS) licensed Santander under Article 9 of the New York Banking Law. Santander primarily underwrites, originates, and services indirect automobile loans that help consumers finance the purchase of new and used vehicles. The NYDFS later conducted a Consumer Compliance and Fair Lending Examination of Santander’s New York indirect automobile lending activities and reviewed its practices from January 1, 2016, through December 31, 2018.
Following its examination, NYDFS alleged that Santander unlawfully charged extension fees to automobile loan borrowers. NYDFS claimed that Santander offered payment extensions through an Extension Agreement that disclosed only a single $25 extension fee. However, for approximately fifteen months, Santander allegedly charged borrowers an additional $25 fee each month without disclosing the recurring charges in the agreement. Although Santander stopped the practice in May 2017 before the examination, New York borrowers had already paid about $237,000 in undisclosed fees, and Santander had assessed another $86,000 that it did not collect. As a result, NYDFS alleged that Santander’s conduct contradicted the terms of its Extension Agreements and misled borrowers by imposing fees not disclosed in the agreements.
To resolve the allegations, Santander agreed to pay the NYDFS a $400,000 civil money penalty and refund more than $275,000 to New York borrowers who had been assessed the disputed fees. In exchange, NYDFS agreed not to pursue any further enforcement action against Santander or its successors for the conduct at issue in the examination.
Bottom Line: Santander neither admitted nor denied the allegations against the company. Santander did not admit to or deny the NYDFS’s allegations.
Document: Consent Order
