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CARLAWYER ©

By Eric Johnson and Tom Hudson

We hope you and your loved ones make On July 10, the CFPB released a report while requiring African-American testers
it through the summer virus free. Like examining recent trends in debt settlement to fund down payments in a lump sum,
you, we long for a normal fall, but the and credit counseling. The report shows requiring larger down payments from
odds of that seem a bit slim. Like last that nearly 1 in 13 consumers with a African-American testers than white
month, there isn’t a great deal going on credit record had at least one account testers, quoting higher biweekly payment
this month by way of business and legal settled through a creditor or had account amounts to African-American testers

developments, but there have been a few. payments managed by a credit counseling on buy-here, pay-here retail installment
Here’s our monthly article on selected legal agency from 2007 through 2019. Since contracts than to white testers, and
developments we think might interest the 2016, the number of debt settlements has making other statements to discourage

auto sales, finance, and leasing world. increased steadily, while credit counseling African-American testers.
This month, we note developments at the numbers are relatively unchanged.
Consumer Financial Protection Bureau The settlement requires the defendants
and the Department of Justice. CFPB Ratifies Prior Actions to Provide to develop and implement a written
Certainty in Light of Seila Law. On July 7, policy designed to prevent discrimination
As usual, our article features the “Case of the CFPB ratified most regulatory actions and ensure compliance with the

the Month” and our “Compliance Tip.” it took from January 4, 2012, through June ECOA and requires the defendants,
Note that this column does not offer legal 30, 2020, to provide certainty that those their principals, and any employees or
advice. Always check with your lawyer to actions are valid in light of the Supreme agents participating in the origination,
learn how what we report might apply to Court’s recent decision in Seila Law LLC processing, underwriting, or servicing of
you or if you have questions. v. CFPB. In Seila Law, the Supreme Court credit transactions to undergo training on
held that the CFPB’s leadership structure ECOA requirements. The defendants also
Federal Developments is unconstitutional but that the Consumer must engage in ongoing recordkeeping
Financial Protection Act’s provision and reporting to the DOJ.
CFPB Seeks Input. On July 24, the limiting the President’s ability to remove
CFPB announced that it plans to the CFPB’s director is severable from the Case of the Month
issue an advance notice of proposed rest of the law. Therefore, the agency can
rulemaking on consumer-authorized continue to operate, but its director must Buyer Stated Claim Under Missouri Law
access to financial records in order to be removable by the President at will. that Installment Contract Assignee Was
solicit stakeholder input on ways it might Liable for Dealer’s Failure to Provide
effectively and efficiently implement DOJ Settles ECOA Claims Against Used Him with Vehicle Title: When the
the financial access rights described in Car Dealership. On July 2, the DOJ dealership where a buyer bought a car
Section 1033 of the Dodd-Frank Act. This announced a settlement with a Maryland failed to provide him with the title to the
follows a CFPB symposium that included used car dealership and its owner and vehicle as required by state law, he sued
experts from consumer groups, fintechs, manager, resolving allegations that the the dealership and the assignee of his
trade associations, financial institutions, dealership violated the Equal Credit retail installment contract for violating the
and data aggregators. The CFPB also Opportunity Act by discriminating Missouri Merchandising Practices Act.
released a summary of the symposium based on race in credit transactions with The trial court entered a default judgment
proceedings. consumers. The lawsuit is based on the for the buyer on his MMPA claim against
results of testing conducted by the DOJ’s the dealership. However, the trial court
CFPB Holds Symposium on Use of Fair Housing Testing Program, in which granted the assignee’s motion to dismiss
Cost-Benefit Analysis for Consumer individuals pose as prospective car buyers the MMPA claim.
Protection Regulations. On July 29, to gather information about possible
the CFPB held a symposium discussing discriminatory practices. Specifically, The Court of Appeals of Missouri
the use of cost-benefit analysis in the complaint alleged that the defendants reversed the dismissal of the MMPA claim
developing consumer financial protection offered more favorable finance terms to against the assignee. The appellate court
regulations. white testers than to African-American concluded that, under Missouri law and
testers with similar credit characteristics, the Federal Trade Commission’s Holder
CFPB Report on Trends in Debt including giving white testers the option to Rule, the buyer stated an MMPA claim
Settlement and Credit Counseling. fund down payments in two installments against the assignee because of its status

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