For the second time in two months, the Consumer Financial Protection Bureau took out an enforcement action in the buy-here, pay-here industry.

On Thursday, the enforcement came against Herbies Auto Sales, an operator in Greeley, Colo., for what the bureau deemed to be abusive financing schemes, hiding auto finance charges and misleading consumers.

The CFPB said Herbies will pay $700,000 in restitution to harmed consumers, with a suspended civil penalty of $100,000.

“Buying a car is often one of the most important purchases a consumer makes, so the experience needs to be fair and above-board,” said CFPB director Richard Cordray.

“But concealing finance charges and the real cost of credit, as Herbies did here, is unlawful and unacceptable,” continued Cordray, whose agency penalized CarHop just before the holidays.

Y King S Corp., which does business as Herbies Auto Sales, operates a dealer that both sells the vehicle and originates the contract without selling that deal to a third party. From at least 2012 through May 2014, the CFPB determined the BHPH operation offered financing to about 1,000 people each year.

The bureau contended that Herbies unlawfully advertised a misleadingly low 9.99 percent annual percentage rate without disclosing a required warranty, a payment reminder device and other credit costs as finance charges. What officials described as a “ruse” helped Herbies convince consumers that they would get the 9.99 percent APR instead of the much higher rate actually charged.

“Also, Herbies engaged in abusive practices,” officials said.

The CFPB indicated Herbies violated the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. Specifically, the bureau said the BHPH operator:

• Hid finance charges and advertised a far lower APR than consumers received: The CFPB insisted Herbies “lied” to consumers about finance charges and APRs in marketing materials, including on showroom window displays, and in Truth-in-Lending Act disclosures. What officials determined to be hidden finance charges included $1,650 for a required repair warranty and $100 for a required GPS payment reminder device.

• Hid finance charges that stemmed from a refusal to negotiate car prices: The bureau found that Herbies refused to negotiate prices with credit customers, but did negotiate with cash customers. Officials indicated the resulting finance charge should have been included in the disclosed cost of credit.

• Used abusive practices: The CFPB asserted Herbies’ financing scheme “lured” consumers with “misleading” advertising and then “kept them in the dark” about the true cost of financing the vehicles they were buying. “This took advantage of consumers’ inability to protect their interests in selecting or using Herbies’ financing, among other things,” officials said.

More details of the enforcement action

Under the Consumer Financial Protection Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive or abusive acts or practices, or that otherwise violate federal consumer financial laws. Under the consent order, Herbies is required to:

• Provide $700,000 in redress to harmed consumers: The CFPB indicated Herbies must provide $700,000 in restitution for consumers who financed cars with Herbies after Jan. 1, 2012, except those whose accounts were charged off due to default. Herbies must submit a timeline to the bureau for making restitution to consumers. Herbies is also subject to a civil penalty of $100,000, which is suspended as long as redress is paid.

• Stop deceiving consumers during financing process: Herbies must not misrepresent interest rates, finance charges, or amounts financed, or any other fact material to consumers concerning the financing of any motor vehicle.

• Post automobile prices: Herbies must clearly and prominently post the purchase price on all vehicle for sale when offering financing.

• Provide certain financing information in advance: Herbies must give consumers certain information about the financing offer, including the actual APR, price of the vehicle, and all finance charges, and get a signed acknowledgment from consumers that they received the required information before or at the time financing is offered.