Ally Trims Claims in Suit Alleging Improper Collection Costs

Ally Financial Inc. convinced a federal judge to dismiss fraud claims in a proposed class action alleging the automobile lender improperly passes collection costs for loan payments on to borrowers.

The US District Court for the Southern District of West Virginia on Tuesday dismissed claims based on prohibitions of fraudulent representations, threats, and coercion to collect debt outlined in the West Virginia Consumer Credit Protection Act.

Lead plaintiff Michael Sheridan alleged Ally works with car dealers to induce them to assign the purchaser’s financing to it and then uses a third-party payment processor to collect payments. The complaint said the ...