Page 8 - MIADA-12-2020

The

CARLAWYER ©

By Nicole F. Munro and Thomas B. Hudson

Santa’s gift to you this month is a fairly High-line dealers take note! On October a contract lies with the party seeking to
short and sweet legal report. Here’s 30, the CFPB and the FRB announced that void the contract. In this case, Dozier
our monthly article on selected legal they are increasing the dollar thresholds presented no evidence of procedural
developments we think might interest in Reg. Z and Reg. M for exempt consumer unconscionability - such as that he did
the auto sales, finance, and leasing world. credit and lease transactions. The Dodd- not understand the arbitration clause or
This month, the action involves the Frank Act provided that the dollar that he lacked an opportunity to read it,
Federal Reserve Board and the Consumer amount thresholds for TILA and the CLA and there was nothing to suggest that
Financial Protection Bureau. As usual, must be adjusted annually by any annual the arbitration clause was substantively
our article features the “Case of the percentage increase in the consumer unconscionable where it applied equally
Month” and our “Compliance Tip.” price index. Because there was an annual to both parties.
percentage increase in the CPI as of
Note that this column does not offer legal June 1, 2019, TILA and CLA protections Moreover, the appellate court noted that
advice. Always check with your lawyer to generally will apply to consumer credit Dozier was given a 30-day right to reject
learn how what we report might apply to transactions and consumer leases of the arbitration clause but failed to do so.
you, or if you have questions. $58,300 or less in 2020. Finally, the appellate court stated that an
arbitration clause is not unconscionable
FEDERAL DEVELOPMENTS CASE OF THE MONTH merely because it precludes the filing of
a class action.
CFPB Issues Fall 2019 Rulemaking Michael Dozier signed a retail installment
Agenda. On November 20, the CFPB contract when he bought a car. The first Dozier v. Credit Acceptance Corp.,
published its Fall 2019 rulemaking page of the contract provided a notice 2019 Ohio App. LEXIS 4418 (Ohio App.
agenda. The agenda lists the regulatory of arbitration, and the fifth page of the October 24, 2019)
matters the Bureau reasonably anticipates contract contained an arbitration clause.
having under consideration from October Dozier initialed below both the notice of THIS MONTH’S CARLAWYER ©
1, 2019 to September 30, 2020. arbitration and the arbitration clause. COMPLIANCE TIP

CFPB and FRB Increase Reg. Z and Dozier sued Credit Acceptance The documents that are used to evidence
Reg. M Dollar Amount Thresholds. Few Corporation, the assignee of the contract, a typical vehicle credit sale transaction at a
folks realize it, but the federal Truth in alleging violations of the Consumer Sales dealership are not (or at least shouldn’t be)
Lending Act and Consumer Leasing Act Practices Act. CAC moved to compel static. Laws and regulations can change at
do not apply (with a couple of exceptions arbitration. Dozier opposed the motion any time, as can the courts’ interpretations
that don’t typically apply to vehicle but merely reiterated his CSPA claims. of those laws and regulations.
credit sales and leases) when the amount
financed (for sales transactions) and the The trial court denied CAC’s motion, Even facts can change – an example might
total lease obligation (for leases) exceed finding that the arbitration clause was be that the arbitration organization named
certain amounts. unconscionable because it banned class in your arbitration clause announces
actions. The Court of Appeals of Ohio that it will no longer accept arbitration
Those amounts remained fixed for several reversed and remanded the case to the proceedings in cases involving consumers.
decades, and over time, inflation had the trial court to stay the litigation pending Something as simple as the arbitration
effect of reducing the application of both arbitration. organization’s change of mailing address
laws, so fewer and fewer consumers were can affect your clause if you’ve included
protected. The amounts are now subject First, the appellate court noted that the that address as part of your arbitration
to change as the cost of living changes. burden of proving unconscionability of clause.

6 | MIADA MISSISSIPPI DEALER Winter 2020