Houston Independent Automobile Dealers Association October Issue: Marketing | Page 14

The CARLAWYER©
By Thomas B. Hudson and Nicole Frush Munro
It’s nearly the dog days of summer, but we’re back, passing on what we’ve recently learned about legal developments
in the auto sales, finance and lease world. This month, we feature developments from the Consumer Financial
Protection Bureau and the Federal Trade Commission, 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 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
Does your compliance officer (don’t tell us you don’t have one) regularly visit the web sites of the CFPB, the FTC,
your state’s Attorney General and your state’s motor vehicle and consumer protection agencies to see what they are
up to? That’s a good (and inexpensive) way to head off legal problems before they get started. If that’s not on the
schedule, it should be. Better yet, get alerts sent to your compliance officer. You don’t have to “”like” the CFPB or
the FTC to follow them on Facebook, twitter, or to subscribe to receive alerts.
Federal Developments
CFPB Targets Payday Lenders, May Hit Dealers and Finance Companies. The CFPB proposed a rule aimed at
payday lending. The rule would require lenders to take steps to make sure consumers have the ability to repay their
loans, and would cut off repeated debit attempts that rack up fees. These proposed rules would cover payday loans,
auto title loans, deposit advance products, and certain high-cost installment and open-end loans. The CFPB’s
definition of covered loans is broad enough to encompass some typical auto finance activities, so dealers and finance
companies should seriously consider participating in the comment process.
CFPB Announces Auto Financing Aids. On June 9, the CFPB released an “auto loan shopping sheet,” a step-bystep guide, and additional online resources as part of a new “Know Before You Owe” initiative to help consumers
shop for auto financing. The Bureau claims that the shopping sheet helps consumers see the total cost of auto
financing and make apples-to-apples comparisons among financing products. The “Know Before You Owe” initiative
walks consumers through each step of the auto finance process to help them decide how much they can afford to
borrow and what options are right for them. The CFPB says its shopping sheet allows consumers to understand the
total cost of financing (not just the monthly payment), comparison shop, and watch out for financing features and addons that could lead to costly surprises down the road. The Know Before You Owe auto financing initiative can be
found at: http://www.consumerfinance.gov/consumer-tools/auto-loans/, and the shopping sheet can be found at:
http://files.consumerfinance.gov/f/documents/201606_cfpb_auto-loan-worksheet.pdf
CFPB Eyes Car Financing. On June 27, the CFPB released a report entitled "Consumer Voices on Automobile
Financing," which examines how consumers navigate the process of financing a vehicle. The report is based on
findings from consumer focus group research conducted by the Bureau and consumer complaint data submitted to
the Bureau. The Bureau reportedly found that while many consumers extensively research the types of vehicles they
want to buy, most do not take as much time to research available financing options. Also, the Bureau's analysis of the
complaint data shows consumers sometimes had difficulty understanding financing features during loan negotiations.
(The Bureau insists on erroneously referring to all auto financing transactions as "loans.") According to the Bureau,
the complaint data also highlighted consumer problems with the sales process for extended warranties and other
add-ons, and few consumers reported focusing on the total cost of financing when they negotiated their financing
contracts.
More CFPB Complaint Data. On June 28, the CFPB released its monthly complaint report, which highlights trends
in the complaint data the Bureau receives through its Consumer Complaint Database. The monthly report includes
complaint data specific to certain companies, overall complaint volume and complaint volume by state, and other
trends in the data. Each month, the report spotlights complaints about a particular issue and complaints from a