Houston Independent Automobile Dealers Association November 2015 Issue: Be a Quality Dealer | Page 8

The CARLAWYER©
By Thomas B. Hudson and Nicole Frush Munro
Hello again! This month, we feature developments from the Consumer Financial Protection
Bureau, the Federal Trade Commission, and the Department of Justice we thought might interest
those in the auto sales, finance or leasing business. We also recap some of the auto sale and
financing lawsuits we follow each month. Remember – we aren’t reporting every recent legal
development, only those we think might be particularly important or interesting to industry.
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
Do you use mandatory arbitration agreements to help protect your company against class action
lawsuits? If you do, go fetch a deal jacket and count the number of different arbitration agreements
you find. Is there one in the retail installment sales contract? Another free-standing one? Another
in your buyer’s order? Yet another in the GAP contract you are selling? Courts don’t like it when
this happens. Your customer’s lawyer will argue that the customer could not possibly have agreed
to all those different arbitration agreements, and the court will be tempted to say that none of the
agreements is enforceable. That would be a good day for the class action lawyer and a bad day
for you.
Federal Developments
Fool Me Twice, Pay $80,000. On September 18, the FTC announced that Ramey Motors, Inc., a
West Virginia dealership, agreed to pay an $80,000 civil penalty to resolve claims that it violated
the terms of a 2012 consent order barring it from deceptively advertising the cost of buying or
leasing vehicles. The dealership allegedly concealed important terms of sale and lease offers, such
as a required down payment, and allegedly failed to clearly and conspicuously provide the terms of
credit.
Time to Review (or Create!) Your Furnisher (Credit Reporting) Policies and Procedures. On
September 16, the FTC announced that the loan-servicing arm of Texas-based auto dealership
Tricolor Auto Group will pay $82,777 in civil penalties to settle charges that it failed to have written
policies and procedures regarding the accuracy of reported credit information and failed to properly
investigate disputed consumer credit information. The FTC alleged that Tricolor Auto Acceptance,
LLC (“TAA”), violated the Furnisher Rule, implemented under the Fair Credit Reporting Act. The
Rule requires companies reporting information about consumers to consumer reporting agencies
to maintain policies and procedures to ensure the information they report is accurate and to allow
consumers to dispute information they believe is inaccurate directly with the company furnishing
the information. The FTC alleged that TAA had no written policies or procedures addressing how to
ensure the accuracy of that information, and that when consumers disputed the accuracy of the
information provided by TAA to the credit reporting agency, TAA referred them to the credit
reporting agency instead of conducting an investigation as required under the Furnisher Rule. In