is the third staff report released by committee Republicans over the last 14 months about the CFPB ' s efforts to regulate auto financing and the CFPB ’ s Equal Credit Opportunity Act enforcement actions against indirect auto financers . This report makes public additional CFPB documents that discuss the CFPB ' s disparate impact methodology in more detail and that reveal potential legal problems with the CFPB ’ s 2015 rule authorizing it to supervise the larger participants of the auto finance market . The report also discusses whether the CFPB ’ s use of the disparate impact theory in enforcement actions against auto financers would survive judicial scrutiny .
Case of the Month
Sale of Extended Warranty that Did Not Cover Consumer ' s Vehicle Deemed Unfair or Deceptive Trade Practice : A consumer bought a used truck from a dealership . The truck ’ s odometer read 157,000 miles . The dealership sold the buyer a 3-month / 3,000-mile " deluxe extended warranty ." After the truck broke down twice within the first month , the buyer replaced the engine and transmission at a cost of $ 6,000 . The warranty only covered half of that expense because the mileage on the truck exceeded the 125,000-mile limit for the full , deluxe extended coverage . The buyer sued the dealership , claiming that it knew that the warranty would not provide full coverage when it sold the warranty . The trial court ruled for the buyer , and the Court of Appeals of Ohio affirmed . The appellate court explained that the dealership engaged in an unfair or deceptive trade practice when it sold the warranty to the buyer because he paid for a warranty that he did not get . The invoice showed that the repair shop charged the buyer for parts that the warranty supposedly covered . The sales contract , warranty , and invoice together were enough to convince the court that the buyer did not get the benefit of the warranty . As a result , the court concluded that the dealership made a false representation when it told the buyer that the " deluxe extended warranty " covered the truck . Note that “ extended warranty ” is the term used in the court ’ s decision – the product sold was most likely a vehicle service contract or similar product . See Greenwood v . Quality Motor Cars by Butch Miller , 2016 Ohio App . LEXIS 5027 ( Ohio App . December 15 , 2016 ).
So there ’ s this month ’ s roundup ! Stay legal , and we ’ ll see you next month .
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Tom ( thudson @ hudco . com ) is Of Counsel and Nikki ( nmunro @ hudco . com ) is a partner in the law firm of Hudson Cook , LLP . Tom has written several books and is the publisher of Spot Delivery ®, a monthly legal newsletter for auto dealers . He is Editor in Chief of CARLAW ®, a monthly report of legal developments for the auto finance and leasing industry . Nikki is a contributing author to the F & I Legal Desk Book and frequently writes for Spot Delivery . For information , visit www . counselorlibrary . com . © CounselorLibrary . com 2016 , all rights reserved . Single publication rights only , to the Association . ( 2 / 17 ). HC # 4812-8548-3585 v . 1