Ally Financial Faces Class-Action over Unlawful Fees

In the Southern District of West Virginia, a class-action lawsuit has been filed against Ally Financial, Inc., a leading digital financial services company. The plaintiff, Michael C. Sheridan, alleges that the company has been routinely violating West Virginia's consumer protection law by passing along its collection costs and payment processing fees to borrowers in the state.

Sheridan's complaint, filed on September 18, 2023, outlines how Ally Financial allegedly charges borrowers extra fees when they make their payments by telephone or online. These 'Pay-to-Pay Fees' are not authorized by the underlying loan agreements or any applicable statute or regulation, according to the lawsuit. "Defendant is both a lender and debt collector and cannot pass its collection costs to borrowers without violating the West Virginia Consumer Credit and Protection Act (CCPA)," the complaint reads.

The CCPA, enacted to safeguard consumers from deceptive and unfair business practices, prohibits unfair or unconscionable means of debt collection. Sheridan's lawsuit alleges that Ally Financial's actions violate the CCPA's prohibitions and its contractual obligations to borrowers.

The plaintiff is seeking to recover unlawfully charged Pay-to-Pay Fees and to enjoin the company from continuing to charge these fees. The class-action lawsuit represents all persons with an automobile loan securing a vehicle in West Virginia, where the lender or assignee is Ally, who paid a fee to Ally or its agent for making a loan payment by telephone or over the internet during the applicable statutes of limitations through the date a class is certified.

The legal theories behind the lawsuit center around the violation of the WVCCPA, including using unfair or unconscionable means to collect a debt, collecting unauthorized fees, and making fraudulent or misleading representations.

Sheridan's complaint is a stark reminder of the importance of consumer protection laws and the role they play in maintaining fair business practices. As the case unfolds, it will be interesting to see how the court interprets the allegations and the potential impact on Ally Financial's operations.