Houston Independent Automobile Dealers Association August Issue: Underwriting | Page 12

The CARLAWYER ©
By Thomas B. Hudson and Nicole Frush Munro
Here’s our monthly article on legal developments in the auto sales, finance and lease world. This month’s
report is skimpy. Perhaps the Consumer Financial Protection Bureau is hunkering down a bit to avoid the
attentions of its detractors in Congress and the Trump administration, but maybe it’s just a slow month. 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
Federal and state privacy laws affect dealerships in unexpected ways. Here are a couple of examples:
Do you do a thorough search of vehicles you take in trade? Your buyers may have left behind all sorts of
personal financial documents that could be a problem in the wrong hands. If your make-ready checklist
doesn’t contain a box to check to indicate the vehicle has been thoroughly searched, consider adding
one. Getting rid of copiers or other electronic devices? Some of these machines retain information from
the documents that have been run through them. The federal disposal rule requires that you handle the
disposal of protected information in a way that reduces the likelihood that the information will end up
where it shouldn’t. Another checklist item?
Federal Developments
More Reading for Compliance Folks. On April 12, the OCC issued the "Retail Lending" booklet of the
Comptroller's Handbook used for examinations of all institutions engaged in retail lending. The Retail
Lending booklet describes characteristics of an effective retail credit risk management framework and
discusses the risks associated with retail lending.
Quo Vadis? On April 14, the CFPB released its Fair Lending Report summarizing the Bureau's fair
lending supervision and enforcement activities and education initiatives during 2016. The Bureau states
that in the coming years it will increase its focus on fair lending compliance in the following areas or
markets: redlining, mortgage and student loan servicing, and small business lending. While any mention
of auto financing is noticeably absent, the CFPB has said it will continue to address fair lending issues in
auto finance during examinations.
CFPB Sues Lenders, Alleging they Collected Debts Consumers Did Not Legally Owe. On April 27,
the CFPB filed suit in federal court against four online lenders – Golden Valley Lending, Inc., Silver Cloud
Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. –alleging they deceived
consumers by collecting debts they did not legally owe. The CFPB’s theory is that the loans were void
under state laws governing interest rate caps or lender licensing, i.e., the companies were neither
licensed nor in possession of legal authority to collect interest at the rates contracted for in the loan
documents. The CFPB seeks to stop the allegedly unlawful practices, recoup relief for harmed
consumers, and impose penalties.