With the growth of the automotive loan market, which just this month has been the subject of examination by national publications such as the Wall Street Journal, has come a corresponding rise in auto loan delinquencies. For automotive finance companies, auto repossessions represent a risk for affirmative claims by consumers both on an individual and, more significantly, on a class basis. Recently, there has been an uptick in class actions against automotive finance companies alleging technical violations of state and federal law governing repossessions.
In theory, auto repossessions should be a fairly simple process. In all states, repossessions of autos that were purchased by way of a Retail Sales Installment Contract are subject to Article 9 of the UCC governing secured transactions, and in every state except for Louisiana, leases are subject to Article 2A of the UCC governing leases of personal property. But some states have enacted additional requirements, which can be found in the states’ various retail installment sales acts, automotive financing acts, or other consumer protection statutes. As explained below, uniform disclosure requirements combined with varying state laws creates the potential for class litigation.