WASHINGTON (Reuters) - A leading U.S. consumer watchdog is preparing to sue Santander bank [SOVBAN.UL] alleging that the Spanish bank overcharged borrowers on auto loans, two sources familiar with the plans said on Friday.

The logo of Santander bank is pictured at the entrance of the group's main office in Sao Paulo, Brazil September 5, 2017. REUTERS/Paulo Whitaker

The action by the Consumer Financial Protection Bureau (CFPB) could come as early as Monday, said the sources, who requested anonymity because they were not authorized to speak about the matter.

A Santander spokeswoman, Raschelle Burton, on Friday declined to comment. A spokesman for the CFPB did not immediately respond to a request for comment.

According to the sources, the lawsuit centers on a financial product, known as ‘guaranteed auto protection’ (GAP), that can shield a car buyer from some of the expense of a serious collision.

If a driver’s auto insurance only covers replacement cost, GAP coverage may cover the entire balance of the loan.

Consumers often purchase GAP insurance in the dealer showroom and the costs are built into the car loan.

Federal and state officials have been looking into whether consumers have been paying for unneeded GAP insurance or have seen their loan rates climb too high when GAP coverage was added.

Last month, Reuters reported that the Office of the Comptroller of the Currency, a bank regulator, was examining how Wells Fargo administered its auto loan business.

In 2015, Santander Consumer USA Holdings Inc SC.N agreed to pay at least $9.35 million to resolve charges that it improperly repossessed cars of members of the U.S. military. It neither admitted nor denied any wrongdoing.

In March, Santander Consumer USA Holdings agreed to pay $22 million in connection with what the attorney general in Massachusetts called a first-in-the-nation settlement involving subprime auto loan securitization.