The CARLAWYER ©
By Thomas B . Hudson and Nicole Frush Munro
Here ’ s our monthly report of legal developments in the auto sales , finance and lease world . This month , we feature developments from the Consumer Financial Protection Bureau the Federal Trade Commission and a congressional committee , as well as our “ Case of the Month .” Remember – we aren ’ t reporting every recent legal development , only those we think might be particularly important or interesting .
Why do we include items from other states ? We want to show you new 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 own lawyer to learn how what we report might apply to you , or if you have questions .
This Month ’ s CARLAWYER © Compliance Tip
Your dealership is probably a corporation or a partnership . If so , and the dealership is sued by a consumer or a regulator , it ’ s likely that your adversary in the litigation will want to poke around your corporate records looking for ways to make or bolster its case . When that happens , what will the minutes of your board of directors or partnership meetings reveal ? Will they show regular meetings , with reports by your compliance , red flags , and privacy officer ( s ), reports on customer complaints , root cause analysis , and the resolution of those complaints , an update of applicable laws and regulations affecting your operation , the effectiveness of your training program , and similar sorts of things ? If not , maybe you ought to meet with your attorney and discuss the topics and operational issues that should be reflected in those minutes .
Federal Developments
The FTC and Selling Recalled Vehicles . On December 16 , the FTC announced that CarMax , Inc ., Asbury Automotive Group , Inc ., and West-Herr Automotive Group , Inc . settled allegations that the dealerships advertised rigorous used car inspections , but failed to adequately disclose that some cars were subject to unrepaired safety recalls . The proposed consent orders prohibit the dealerships from claiming their used vehicles are safe , have been repaired for safety issues , or have been subject to safety-related inspections , unless the vehicles are free of open recalls or the companies clearly and conspicuously disclose that the vehicles may be subject to unrepaired recalls for safety issues and explain how consumers can determine whether a vehicle is subject to such a recall that has not been repaired . The FTC also approved final consent orders in similar cases , settled earlier this year , against General Motors Company , Jim Koons Management Company , and Lithia Motors , Inc .
Curbing Debt Collectors . Buy-here , pay-here dealers need to keep a careful eye on the CFPB ’ s actions involving debt collectors . On January 9 , the CFPB announced a consent order with two Oklahoma-based law firms , resolving allegations under the Fair Debt Collection Practices Act that the law firms ' debt collection letters and phone calls misrepresented that attorneys had reviewed consumers ' accounts before initiating collection efforts . The CFPB also alleged that the law firms improperly notarized affidavits in collection lawsuits against consumers and furnished information to credit reporting agencies without written policies or procedures to ensure the information ’ s accuracy and integrity , in violation of the Fair Credit Reporting Act . The order requires the law firms to refund $ 577,135 to consumers harmed by the allegedly illegal debt collection actions and to pay a civil money penalty of $ 78,800 .
House Republicans Hammer CFPB on Discrimination Actions – Again . On January 18 , the Republican staff of the House of Representatives ' Committee on Financial Services released a report titled " Unsafe at Any Bureaucracy , Part III : The CFPB ' s Vitiated Legal Case Against Auto Lenders ." This