What the New York State Department of Financial Services deemed to be a discrepancy with charges to get payment extensions has left Santander Consumer USA to pay a $400,000 penalty and more than $275,000 to eligible impacted consumers.

According to a news release from Empire State regulators distributed this week, a licensed lending institution like Santander can permit consumers to request an extension of time to make payments on their auto financing.

However, New York banking law prohibits licensees from advertising, printing, displaying, publishing, distributing, or broadcasting any statements or representations regarding rates, terms, or conditions of lending which are false, misleading, or deceptive.

The department’s investigation revealed that despite the extension agreement that was displayed, published, and distributed by Santander only disclosing a single $25 extension fee, officials said that Santander charged borrowers an extension fee of $25 per month.

Although Santander voluntarily ceased charging these undisclosed extension fees, officials said this practice resulted in New York consumers paying approximately $237,000 in undisclosed fees.

The New York State Department of Financial Services also said Santander assessed, but did not collect, $86,000 in undisclosed fees from other New York borrowers.

The settlement requires Santander to provide restitution to all eligible impacted borrowers in the form of either checks to refund paid fees (with interest) or a waiver of assessed but unpaid fees.

“The Department is committed to holding institutions accountable for essential consumer safeguards under New York Law,” said Kaitlin Asrow, who is acting superintendent of the New York State Department of Financial Services. “Today’s settlement puts money back in the pocket of New Yorkers for clear violations.”