Houston Independent Automobile Dealers Association October Issue: Marketing | Page 8

The CARLAWYER©
By Thomas B. Hudson and Nicole Frush Munro
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
Signed up for the CFPB’s complaint portal yet? You need to be monitoring complaints from all sources,
and the CFPB offers one more source for determining whether your customers are unhappy with you.
And taking care of complaints is one of the most effective ways of staying out of the regulators’
crosshairs. What, exactly, are you waiting for?
Federal Developments
Speaking of complaints, on May 24, the CFPB released its monthly complaint report, which
highlights trends in the complaint data the Bureau receives through its Consumer Complaint
Database. The 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 particular geographic location. The latest report focuses on
complaints related to credit reporting and highlights complaints from consumers residing in New Mexico.
Are You Involved in Title Lending? On May 18, the CFPB released a report on the title loan
business. The CFPB's report demonstrated that 20% of borrowers who obtain a single-payment auto title
loan have their car or truck seized by their lender when they default. Evidently, that means that 80% of
these borrowers managed to get past their dire financial problems without having their cars seized, but
that narrative doesn’t advance the CFPB’s agenda. According to the CFPB's research, lenders renewed
more than 80% of these loans on the due date because borrowers could not otherwise repay the loan.
The report examined nearly 3.5 million anonymized, single-payment auto title loan records from nonbank
lenders from 2010 through 2013. The CFPB concluded from its study that these auto title loans have
issues similar to payday loans, including high rates of consumer reborrowing, which can trigger high costs
in fees and interest.
Warranty Rule Changes on the Way. On May 18, the FTC proposed to amend the rules governing
Disclosure of Written Consumer Product Warranty Terms and Conditions ("Disclosure Rule") and PreSale Availability of Written Warranty Terms ("Pre-Sale Availability Rule") to implement the E-Warranty
Act, which allows for the use of websites to disseminate warranty terms to consumers in some
circumstances. The Disclosure Rule specifies the aspects of warranty coverage that must be disclosed in
written warranties, as well as the exact language that must be used for certain disclosures with respect to
state law regarding the duration of implied warranties and the availability of consequential or incidental
damages. Under the Disclosure Rule, warranty information must be disclosed in simple, easily
understandable, and concise language in a single document. The warrantor must disclose any limitations
on the duration of implied warranties on the face of the warranty, as mandated by the Magnuson-Moss