Houston Independent Automobile Dealers Association November 2015 Issue: Be a Quality Dealer | Page 9

addition to the civil penalty, TAA will be permanently barred from any further violations of the
Furnisher Rule.
How Are Your Phone Manners? On September 11, the FCC’s Enforcement Bureau cited First
National Bank (“FNB”) and Lyft, Inc., a ride-sharing service, for violating rules implementing the
Telephone Consumer Protection Act by making autodialed and/or prerecorded marketing calls and
texts to consumers' cell phones without the consumers' prior express consent. Under the TCPA
rules, a company may not require consumers to agree to receive autodialed calls and texts as a
condition of buying any good, service, or property. FNB allegedly required consumers to agree to
receive autodialed marketing text messages in order to use its online banking services and Apple
Pay service. Lyft's terms of service allegedly allowed consumers to opt out of receiving autodialed
and/or prerecorded marketing texts and calls, but the FCC contended that the opt-out feature on
the company's website was not easy to locate, and even if consumers were able to opt-out, they
were unable to use Lyft's services until they opted back into receiving such marketing calls and
texts. The citations are a warning to the companies that if they continue to violate the law, the
Commission may impose sanctions.
Another CFPB Enforcement Action on Discrimination. On September 28, the CFPB
announced an action against Fifth Third Bank, for allegedly discriminatory auto finance pricing. The
joint CFPB and Department of Justice auto-finance enforcement action requires Fifth Third to
change its pricing and compensation system to minimize the risks of discrimination, and to pay $18
million to harmed African-American and Hispanic car buyers. Under the order, Fifth Third will
reduce dealer discretion to mark up the interest rate to only 125 basis points above the buy rate for
auto credit contracts with terms of 5 years or less, and 100 basis points for auto credit contracts
with longer terms. The order gives Fifth Third the option to move to non-discretionary dealer
compensation. The Bureau says that it did not assess penalties against Fifth Third because of the
steps the company is taking that directly address the fair lending risk of discretionary pricing and
compensation systems by substantially reducing or eliminating that discretion altogether.
Litigation
Loser-Pays Arbitration Provision Stricken from Arbitration Agreement as Unconscionable.
A car buyer sued an online seller, alleging that when the car was delivered, agreed upon repairs
were not completed. The trial court stayed the proceeding pending arbitration. The buyer appealed,
arguing that the arbitration agreement was invalid because it contained a loser-pays provision that
was against public policy. The appellate court affirmed the trial court's stay of the proceedings
pending arbitration, but struck the loser-pays provision from the agreement. The appellate court
concluded that the provision was substantively unconscionable because it shifted the burden of all
arbitration costs and expenses to the consumer, which would be prohibitive to the average car
buyer. In addition, the appellate court found that the loser-pays provision was procedurally
unconscionable because it was buried in a standard adhesion contract with no realistic option for
negotiation or alteration of the terms, and the provision failed to provide adequate explanation of its
actual effect. Last, the appellate court concluded that the loser-pays provision attempted to
circumvent the attorneys' fees provision in the Ohio Consumer Sales Practices Act, which imposes
attorneys' fees on the losing party when the action is maintained in bad faith. Because the bad faith
requirement was removed in the loser-pays provision, the appellate court concluded the provision
was against the CSPA's long-standing public policy of not requiring consumers to pay the
supplier's attorneys' fees when the action is brought in good faith. See Devito v. Autos Direct
Online, Inc., 2015 Ohio App. LEXIS 3357 (Ohio App. August 20, 2015).
One-Sided Arbitration Agreement Unenforceable. In connection with a title loan, the borrower
signed an arbitration agreement that stated that the consumer and lender agree that all claims,