Philadelphia Federal Credit Union Hit with Class Action Over Allegedly Improper Vehicle Repossession Notices

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A proposed class action claims auto lender Philadelphia Federal Credit Union (PFCU) has failed to properly notify borrowers of their vehicle’s repossession by inflating the amount needed to reclaim the property and misrepresenting consumers’ redemption rights under state law.

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The 11-page lawsuit says that when a borrower allegedly defaults on a vehicle loan, the credit union—which offers vehicle financing services to Pennsylvania consumers—repossesses and resells the automobile. However, in violation of the state’s Uniform Commercial Code, PFCU provides inadequate notice of repossession to borrowers by charging unwarranted added fees to reclaim their vehicles and misleading consumers about the amount of time they have to redeem the property, the suit alleges.

One plaintiff, a Philadelphia resident, financed the purchase of a used 2021 Nissan Versa through PFCU in June of this year, the case relays. As the complaint tells it, in September, the defendant declared a default on the consumer’s loan and repossessed the vehicle.

According to the filing, state law stipulates that a post-repossession notice must inform the borrower of the vehicle’s repossession, how the car will be sold and how long the debtor has to redeem the property, among other things.

In the repossession notice the plaintiff received in September 2023, PFCU stated that he had 15 days from the date of the notice to redeem the vehicle, the lawsuit shares. However, the suit claims that the notice was misleading, as state law allows a borrower to redeem a repossessed vehicle at any time until it is sold.

In addition, the notice sent to the plaintiff advised him that to reclaim the car, he must pay a $425 repossession fee, $20 per day for storage costs, daily interest charges, a $75 “redemption fee” and “additional fees” of $75, the case describes.

Per the complaint, the two $75 fees unjustifiably inflated the amount needed to redeem the property, as the charges are not derived from any actual cost incurred by the defendant and have “no basis in law or contract.”

The filing alleges that PFCU’s practices are “commercially unreasonable,” and it is believed that the credit union has sent similarly improper repossession notices to consumers across the state.

The lawsuit looks to represent anyone in Pennsylvania who entered into a finance agreement with PFCU that pledged a purchased motor vehicle as collateral and had the vehicle repossessed by PFCU pursuant to the finance agreement within the last six years.

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