Houston Independent Automobile Dealers Association August Issue: Underwriting | Page 10

The CARLAWYER ©
By Thomas B. Hudson and Nicole F. Munro
Here’s our monthly article on legal developments in the auto sales, finance and lease world. Last month’s
report was skimpy, and this one isn’t much better. The Consumer Financial Protection Bureau is still fairly
quiet, at least on the enforcement side, but continues to be active on the supervisory side. That makes
sense, since supervision is a lower profile activity less likely to draw fire from Congressional Republicans
and other CFPB critics. In any event, this month’s article features our “Case of the Month,” activity from
the CFPB and the Office of the Comptroller of the Currency.
Why do we include items from other states? We want to show you legal developments and trends. Also,
another state’s laws might be a lot like your state’s laws. If attorneys general or plaintiffs’ lawyers are
pursuing particular types of claims in other states, those claims might soon appear in your state.
Note that this column does not offer legal advice. Always check with your lawyer to learn how what we
report might apply to you, or if you have questions.
This Month’s CARLAWYER© Compliance Tip
We usually don’t repeat tips from previous articles, but in light of the “Case of the Month” discussed
below, here’s one we have offered before – make sure that your computers/printers are entering
information on your retail installment contracts, buyers’ orders and leases in exactly the correct place.
Misalignment of data entry can create compliance violations, and these sorts of compliance violations –
ones that apply to every deal you do – make for dangerous class actions. It is often the case that “close”
just won’t cut it. If you have any question about whether your alignment is close enough, talk to your
lawyer.
Federal Developments
BHPH Dealers, Take Note. On June 8, CFPB director Richard Cordray provided some clarity on the
status of the CFPB's debt collector rulemaking by announcing that the CFPB will carve certain "right
consumer, right amount" rules out of the debt collector rulemaking and instead address such rules in a
separate rulemaking for first-party creditors. In its July 2016 Outline of Proposals under Consideration for
debt collectors, the CFPB included a number of proposals that would affect the information shared
between creditors and debt buyers or third-party debt collectors and would impose specific, ongoing
obligations on debt collectors to ensure that they are collecting the right amount from the right consumer.
Director Cordray explained that the CFPB has found that these "right consumer, right amount" rules
would benefit from input from all market participants (especially creditors, because they create the
information about the debt upon which debt collectors rely). Therefore, Cordray said, the CFPB plans to
focus its debt collector rulemaking on rules that will affect debt collection practices and require
disclosures. Cordray anticipates the CFPB will be able to "move forward more quickly" on the debt
collector rulemaking by carving out rules that could affect creditors and taking up "right consumer, right
amount" rules in a separate rulemaking for first-party creditors.
Third Party FAQs? On June 7, the OCC issued frequently asked questions to supplement OCC Bulletin
2013-29, "Third-Party Relationships: Risk Management Guidance," which was originally issued October
30, 2013. OCC Bulletin 2013-29 provides guidance to national banks and federal savings associations for
assessing and managing risks associated with third-party relationships. The FAQs provide further
explanation of the guidance outlined in an earlier OCC Bulletin. “Why should dealers care about these