With several rulings and actions, the CFPB’s recently released Summer Supervisory Highlights and subsequent field hearing in September 2014 may seem to be yet another attack from the CFPB. But a closer look reveals that the release of the Summer Supervisory Highlights and subsequent field hearing may signal a softening of the agency’s harsh 2013 Auto Finance Guidance. Nevertheless, in the report, and at the hearing, the CFPB took five key steps that will most certainly impact automotive lending practices.
Advertising: New Times, New Media, New Rules
Advertising the sale or financing of motor vehicles has become increasingly complicated with an aggressive Federal Trade Commission (FTC) and the need to reach consumers (especially Millennials) through social media, which was never thought of when advertising laws and regulations were written. It certainly makes a dealer’s life more complex.
The FTC has launched a new automotive program since the Dodd-Frank Act gave it streamlined authority to write regulations. It has also become much more active in pursuing dealers for deceptive advertising under Section 5 of the FTC Act. (Since 2012, the FTC has brought 16 cases against auto dealers for deceptive advertising.) The FTC’s Head of its Bureau of Consumer Affairs said the FTC believes that deceptive dealer advertising is a “significant problem,” many automotive dealer investigations are “in the pipeline,” and that this is a “priority area” for the FTC.
An Industry First: Online Rate Justification Forms for Dealers
Last year, the Consumer Financial Protection Bureau (CFPB) issued guidance on credit discrimination in the indirect automotive finance market, putting dealerships and lenders on notice about potential audits and punishments. In response, Dealertrack recommended that dealers adopt and implement an Equal Credit Opportunity Act (ECOA) Fair Lending Policy, including complete documentation of any deviation from a dealer’s buy rate markup policy.
To help dealership develop a fair lending policy and better defend themselves in credit discrimination audits, Dealertrack made an Exception Rate Justification Form available to its Compliance solution subscribers last year. Today, for the first time, this form is available online to its subscribers.
Compliance Definition – Fraud Alerts
In this video, Randy Henrick, Dealertrack’s Regulatory and Compliance Counsel, explains why fraud alerts require a high level of due diligence in verifying a customer’s identity.
Prospective Creep of CFPB into Auto Finance
The Consumer Financial Protection Bureau’s (“CFPB”) newly-appointed Director, Richard Cordray, is no friend of auto dealers. When he was Attorney General of Ohio, Mr. Cordray brought numerous actions against dealers for alleged violations…
New “Safe Harbor” Privacy Notice Takes Effect January 1, 2011
The FTC and Federal Reserve Board have published a new form of privacy notice that, if properly completed and followed, will give dealers a “safe harbor” (protection) from liability. It is a simple form…
NEW: Manage Auto Financing in Real Time with DealerTrack Mobile!
Take your deal workflow to the next level by adding new intuitive mobile apps from DealerTrack. Securely track the pulse of your deals within finance and vehicle inventory workflows whether you are on the…
Compliance Definition – Consumer Financial Protection Bureau (“CFPB”)
An independent federal agency established by the Dodd-Frank Act to enforce consumer protection regulations and issue new regulations prohibiting unfair, deceptive, or abusive acts and practices, among other things. Auto dealers that sell, lease…
New 2011 Compliance Initiatives May Signal Auto Dealer Scrutiny
The summer of 2011 has brought a dramatic increase in compliance enforcement proceedings against banks and financial institutions. Many of the issues apply to auto dealers as well and dealers will be likely candidates…
Auto Compliance after July 21, 2011: New Rules. New Players. New Risks
July 21, 2011 marked an important date for auto dealers and consumer creditors generally. It was the one-year anniversary of the signing of the Dodd-Frank Act as well as the “designated transfer date” for…
DealerTrack offers FREE support to help dealers comply with the Dodd-Frank Act
DealerTrack is offering new free functionality to help dealers comply with Dodd-Frank Act requirement. This free functionality was available to dealers as of July 20, 2011. The Dodd-Frank Act, which went into effect on July 21, 2011, requires additional information…
The Impact of OFAC on Dealers
Hopefully you know that you must “run an OFAC” on every customer you do business with, both cash and credit customers. But what exactly is OFAC and what does “running an OFAC” mean? What…
