Page 38 - GIADA May-June 2020

THE CARLAWYER ©

The CARLAWYER ©

By Nicole F. Munro and Thomas B. Hudson

We hope you and your loved ones are safe of the CFPB’s flexible supervisory and en- bank issued a conditional approval of his
and healthy and that things go well for you forcement approach during this pandemic credit application. The dealership and the
as we try to emerge from all of our various regarding compliance with the Fair Credit consumer entered into a retail installment
lockdown and shelter-in-place mandates. Reporting Act and Regulation V.” contract whereby the consumer agreed to
Business and legal developments have not pay $683 per month for 75 months, begin-
entirely come to a halt while we’ve been In the statement, the CFPB reiterates its ning on May 4, 2017, and a $138 dealer fee,
hunkered down, though, so here’s our prior guidance encouraging financial insti- and the consumer left with the car.
monthly article on selected legal devel- tutions to work with borrowers and other
opments we think might interest the auto customers affected by COVID-19 and en- When the bank found out that the consum-
sales, finance, and leasing world. courages institutions to provide accurate er decided to obtain GAP coverage, a ser-
information to consumer reporting agen- vice warranty, and a tire program, it decid-
This month, we note developments at the cies. The Bureau also expects furnishers to ed not to finance the purchase. Thereafter,
Federal Trade Commission and the Con- comply with the provision of the CARES the dealership secured financing from an-
sumer Financial Protection Bureau. We Act that generally requires them to report other bank, reduced the annual percentage
don’t have room in this article for all the as current certain credit obligations for rate to compensate the consumer for any
virus-related regulatory developments, which they make payment accommoda- trouble caused by the change in financing,
but for a list of those, you can visit Hud- tions to consumers affected by COVID-19. and sent him a second RIC reflecting the
son Cook’s COVID-19 resources website at In addition, the Bureau’s statement en- reduced rate and a lower monthly payment.
hudsoncook.com/covid-19. courages furnishers to voluntarily provide When the consumer did not timely return
consumers affected by COVID-19 with the second RIC, the dealership prepared
As usual, our article features the “Case of payment flexibility. The Bureau “does not a third RIC, which provided the same fi-
the Month” and our “Compliance Tip.” intend to cite in examinations or take en- nancial disclosures as the second RIC but
Note that this column does not offer legal forcement actions against those who fur- changed the first payment date to July 3,
advice. Always check with your lawyer to nish information to consumer reporting 2017. The consumer returned the third
learn how what we report might apply to agencies that accurately reflects the pay- RIC, along with the bank’s loan application,
you, or if you have questions. ment relief measures they are employing.” to the dealership, and the bank requested
Federal Developments Finally, with respect to the FCRA’s require- the consumer’s credit report on June 26 and
ment to investigate consumer disputes, the July 6.
FTC Postpones Safeguards Workshop. In CFPB “will consider a consumer reporting
an update to an item we reported on last agency’s or furnisher’s individual circum- Because the bank had not accepted the as-
month, the FTC postponed its May 13 pub- stances and does not intend to cite in an signment of the third RIC as of the date the
lic workshop seeking input on proposed examination or bring an enforcement ac- first payment was due and the consumer
amendments to the Safeguards Rule until tion against a consumer reporting agency refused to make that payment to the deal-
July 13, 2020, and will now hold the event or furnisher making good faith efforts to ership, the dealership covered the loss. On
online. The workshop seeks information on investigate disputes as quickly as possible, July 20, the bank paid the dealership for the
topics such as price models for specific el- even if dispute investigations take longer contract.
ements of information security programs, than the statutory timeframe.”
standards for security in various industries, The consumer then sued the dealership for
the availability of third-party information CASE OF THE MONTH breach of contract, breach of the implied
security services aimed at different sized warranty of good faith and fair dealing, and
institutions, information about penetra- Car Buyer Unsuccessful on Claims Against violations of the Pennsylvania Motor Ve-
tion and vulnerability testing, and the costs Dealership Arising Out of Terms of Retail hicle Sales Finance Act, the federal Truth
of possible alternatives to encryption and Installment Contract and Replacement in Lending Act, the Pennsylvania Unfair
multifactor authentication. The comment of First Contract with Another Contract Trade Practices and Consumer Protection
deadline on these topics is August 12, 2020. When Initial Financial Fell Through: A Law, and the federal Fair Credit Reporting
CFPB Credit Reporting Developments. On consumer went to a dealership to buy a car. Act. The U.S. District Court for the Eastern
April 1, the CFPB released a policy state- The dealership obtained his credit report District of Pennsylvania granted the deal-
ment to “highlight furnishers’ responsibili- on March 20, 2017. The consumer executed ership’s motion for summary judgment on
ties under the CARES Act and inform con- a credit application, and the dealership sub- all claims.
sumer reporting agencies and furnishers mitted it to several financial institutions. A

36 | GIADA Independent Auto Dealer MAY/JUN 2020