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THE CARLAWYER

The CARLAWYER ©

By Thomas B. Hudson and Nicole F. Munro
Here’s our monthly article on legal allows servicemembers to end vehicle and (3) to foster operational excellence
developments in the auto sales, finance and leases early after entering military service through efficient and effective processes,
lease world. This month, we’re reporting or receiving qualifying military orders for governance, and security of resources and
on activities of the Consumer Financial a permanent change of station or to deploy. information. Acting Director Mulvaney
Protection Bureau, the Department of stated: “If there is one way to summarize the
Justice and the courts. As usual, this month’s When servicemembers lawfully terminate strategic changes occurring at the Bureau,
article features our “Case of the Month.” vehicle leases, the SCRA requires that it is this: we have committed to fulfill the
they be refunded all lease amounts paid Bureau’s statutory responsibilities, but go
Note that this column does not offer legal in advance. At issue in this case is which no further.”
advice. Always check with your lawyer to categories of fees are paid "in advance" that
learn how what we report might apply to must be refunded under the SCRA. New CFPB Faces. On February 6,
you, or if you have questions. Mulvaney named Kirsten Sutton Mork as
The DOJ alleged that part of the lease’s the CFPB’s new chief of staff. Mork has
©
THIS MONTH’S CARLAWYER capitalized cost reduction (“CCR”) is been staff director of the House Financial
COMPLIANCE TIP subject to a pro rata refund. The CCR is Services Committee since early 2017. In
an amount the consumer pays to the dealer addition, on January 30, Mulvaney advised
It’s that time of year again – dealer and at lease signing that reduces the amount CFPB staff that the Office of Fair Lending
finance company associations are gearing of lease payments. The CCR could come and Equal Opportunity will be transferred
up for their spring conferences. If you plan from a consumer's cash payment, trade-in to the Director’s Office, as part of the Office
to attend one or more of these in search of equity, or rebate or other credit provided by of Equal Opportunity and Fairness. The
ways to improve your operations, remember the manufacturer, lessor, or a third party. Office of Fair Lending will continue to focus
as you listen to the various presenters that on advocacy, coordination, and education,
state laws governing what dealers can and Lessors have often contended that none of but will no longer have enforcement
cannot do vary. What’s permitted in State the CCR is an amount paid in advance on responsibility.
A might be a violation of the law in State the lease, but rather the CCR acts as a form
B. To put it another way, what might of down payment, retained by the dealer More Information, Please! The
win an award in a 20-group’s “Best Ideas” and not paid to or received by the lease CFPB recently issued five Requests for
contest might be legal in State A but might assignee. Information as part of Mulvaney’s call for
constitute a felony in State B. So if you pick evidence to ensure the CFPB is fulfilling its
up a great idea at a conference, make sure Without admitting factual allegations or proper and appropriate functions to best
that your lawyer blesses it for your state statements of law, the finance company protect consumers. These RFIs invite the
before you implement it. And don’t forget agreed to refund over $2 million to 492 public to submit feedback and suggest ways
to visit us at the CounselorLibrary.com servicemembers and their co-lessees. In to improve outcomes for both consumers
booth and listen in on a few compliance addition, the company will pay $60,788 to and covered entities. We reported last
sessions. the U.S. Treasury. month on the first of these, dealing with the
CFPB’s civil investigative demand process.
FEDERAL DEVELOPMENTS What’s the Plan? On February 12, the Here are four more CFPB RFIs.
CFPB released its 5-year strategic plan.
Servicemembers and Leasing. On The plan sets forth the CFPB’s mission The CFPB’s second RFI seeks public
February 22, the Department of Justice to regulate the offering and provision of comment on whether and how the
announced that it settled a case against a consumer financial products and services CFPB might improve its administrative
captive auto finance company, resolving under the federal consumer financial laws adjudication processes, including its Rules
allegations that the company violated the and to educate and empower consumers to of Practice for Adjudication Proceedings,
Servicemembers Civil Relief Act by failing make better-informed financial decisions. which pertain to the general conduct of
to refund certain up-front lease amounts to CFPB’s strategic goals include: (1) to ensure administrative adjudication proceedings;
servicemembers who lawfully terminated that all consumers have access to markets the initiation of such proceedings and
their vehicle leases early. for consumer financial products and prehearing rules; hearings; decisions and
services; (2) to implement and enforce the appeals; and temporary cease-and-desist
This is the first DOJ case addressing a law consistently to ensure that markets for proceedings. Comments are due by April
vehicle lessor's SCRA obligation to refund consumer financial products and services 6, 2018.
certain types of lease payments. The SCRA are fair, transparent, and competitive; Continued on page 38
36 | GIADA Independent Auto Dealer MARCH 2018