Ally Financial Auto Loan Collection Pay-to-Pay Fee Class Action

This class action involves an auto loan serviced by Ally Financial, Inc. and a pay-to-pay charge it applied to borrower payments. The complaint alleges that the fee was excessive and not permitted under the Retail Installment Sales Contract (RISC) governing the loan.

The class for this action is all persons in West Virginia (1) with property secured by a loan, where the lender is Ally or the loan is serviced by Ally, and (2) who were charged a payment processing fee.

The plaintiff in this case, Michael Phelps, bought his daughter a 2017 car under a RISC with a date of June 14, 2017. It required Phelps to make regular monthly payments of $394.73.

In September 2019, Ally Financial performed collection on Phelps’s car loan. The company told Phelps that he owed $1,336.25 and that the amount was due by September 26.

Phelps, the complaint claims, called Ally to talk about possible payment workout plans. Ally told him that he would have to make an immediate payment of at least $205.26 by certified check.

Phelps is visually impaired and has limited mobility. However, Ally still required that the payment be in the form of a certified check. Phelps visited his bank in person and sent a certified check.

According to the complaint, “[D]espite doing as Ally requested, and after many phone calls with Ally staff to inquire about the certified check’s receipt, Ally informed Mr. Phelps that his loan workout request had been rejected.” Nevertheless, the complaint alleges that Phelps was sent a statement that showed a reduced monthly payment of $308.03.

Phelps used Ally’s pay-by-phone service on October 1, 2019 to make a $308.03 payment. He was also charged a $4 fee for paying by phone.

The complaint alleges that this fee is excessive, because “the typical cost for phone payment service through Western Union is approximately 50 cents.”

The complaint suggests that phone payments may be made under a different arrangement: “Western Union engages in private servicing agreements with debt collectors, like Ally, that provide either a low processing cost that is marked[ ]up by Ally for profit, or a revenue[-]sharing agreement between Ally or its parent companies, and Western Union, or its successor, ACI Worldwide.”

However, it’s done, the complaint alleges, “the processing payment defrays Ally’s costs of collection and shifts the financial burden of Ally’s collection costs onto Mr. [Phelps.”]

The complaint alleges that the $4 fee was not authorized by the terms of the RISC and claims that it violated the West Virginia Consumer Credit and Protection Act (WVCCPA). Phelps’s attorney sent a letter to Ally informing it of this, and while he received an answer, the complaint alleges that Ally “refus[ed] to provide any cure or relief to Mr. Phelps.”

Article Type: Lawsuit
Topic: Loans
Tags: Loan-Related Unfair Practices, Processing or Pay-to-Pay Fees