Page 42 - GIADA-April2017

COMPLIANCE TIPS

Here’s our monthly report of legal The CARLAWYER ©
developments in the auto sales, finance
and lease world. This month, we feature
a Presidential Executive Order as well BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO
as developments from the Consumer
Financial Protection Bureau, the Office Dealers seldom give much thought to their consumers and operating costs for lenders;
of the Comptroller of the Currency and compliance with the Americans With Dis- and (4) implications for consumer privacy
the Federal Trade Commission, as well abilities Act, and, when they do, they think and security. Comments on the reques are
as our “Case of the Month.” Remember, about things like wheelchair access to their due by May 19, 2017.
we aren’t reporting every recent legal buildings. Now we have picked up reports
development, only those we think might of complaints and threats of complaints Trump Stifles Regulations. On February
be particularly important or interesting. against dealers alleging that the dealer- 24, President Trump signed an Executive
ships’ web sites are not accessible by those Order requiring every federal agency, ex-
Why do we include items from other with disabilities. This has become a “cot- cept those that receive a waiver, to establish
states? We want to show you legal devel- tage industry” in some areas of the coun- a Regulatory Reform Task Force to evalu-
opments and trends. Also, another state’s try, with the plaintiffs’ lawyers threatening ate existing regulations and make recom-
laws might be a lot like your state’s laws. to file class action lawsuits unless dealers mendations to the agency head regarding
If attorneys general or plaintiffs’ lawyers pay up. And your arbitration agreement their repeal, replacement, or modification.
are pursuing particular types of claims won’t help here – these plaintiffs probably The order directs each task force to iden-
in other states, those claims might soon have not done business with your dealer- tify regulations that, among other things,
appear in your state. ship. Maybe it’s time for another visit to eliminate jobs or inhibit job creation, are
the lawyer. outdated, unnecessary, or ineffective, im-
Note that this column does not offer pose costs that exceed benefits, or create
legal advice. Always check with your Federal Developments a serious inconsistency or otherwise in-
lawyer to learn how what we report terfere with regulatory reform initiatives
might apply to you, or if you have Report Card Time. In early February, and policies. It is unclear if executive or-
questions. the FTC provided its annual letters to the ders such as this one apply to independent
CFPB summarizing the FTC's enforce- agencies, particularly the CFPB.
Thomas B. Hudson ment actions, research and policy initia-
Partner, Hudson tives, and education efforts in 2016 related Banks and Third Parties – Dealers, Per-
Cook, LLC to the Equal Credit Opportunity Act and haps? On January 24, the OCC released
thudson@hudco.com the Fair Debt Collection Practices Act. supplemental procedures for examining
national banks and federal savings associ-
Alternative Data. On February 16, the ations' risk management of third-party re-
CFPB announced that it is seeking infor- lationships. The new examination proce-
mation about the potential use of "alterna- dures supplement OCC Bulletin 2013-29,
tive data" and modeling techniques in the "Third-Party Relationships: Risk Manage-
Nicole Frush credit process. The CFPB is requesting pub- ment Guidance," issued in October 2013.
Munro lic feedback about the benefits and risks of
Partner, Hudson using unconventional information sources, Case of the Month
Cook, LLC called "alternative data," to make lending
nmunro@hudco.com decisions about consumers with no credit Car buyers brought a class action suit
history or with history that has gone stale against several related dealerships, among
or is insufficient to produce a credit score others, for violating the Truth in Lending
under most scoring models. Specifically, Act, Oregon’s Unlawful Trade Practices
the CFPB is seeking information about: (1) Act, and Oregon’s financial elder abuse
whether using alternative data to create or statute, alleging that the defendants failed
augment a credit score could increase ac- to comply with the disclosure require-
cess to credit by helping lenders better as- ments of TILA and the UTPA. Specifically,
sess consumer creditworthiness; (2) wheth- the plaintiffs alleged that the defendants
er the use of alternative data could make obtained payments or “kickbacks” from
credit decisions more complex for both third parties by negotiating higher interest
consumers and industry; (3) the impact of rates for vehicle financing than the interest
the use of alternative data on loan costs for rates quoted by the financing entities and

40 | GIADA Independent Auto Dealer APRIL 2017