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THE ANSWERS pricing levels, with deviations for nondis- 5. TRUE. Often dealers seek to equate lease
criminatory reasons, and with results you rates to APR and advertise low rates in
can review and for which you can take connection with leases and nothing more.
1. TRUE. Judicial decisions have strength- corrective action for non-compliance, you The Consumer Leasing Act prohibits that.
ened the ability of businesses to use arbi- are not adequately protecting your deal- In advertising a lease rate, you may not use
tration provisions and reap the benefits. ership. The Fair Lending Program and the the term “Annual Percentage Rate”, “Annu-
Several Supreme Court decisions have sup- Program for Sale of Voluntary Protection al Lease Rate” or other equivalent term. In
ported predispute arbitration. Products published by the National Auto- addition, if you do advertise a lease rate, the
mobile Dealers’ Association are compre- following statement must appear near the
Unfortunately, limiting or ending predis- hensive programs your dealership should rate with no intervening language or sym-
pute arbitration is at the top of the agenda implement and follow. bols: “This percentage may not measure the
for every consumer and employee advocacy overall cost of financing the lease.”
group. For example, a subcommittee of the 3. TRUE. Advertising enforcement will
U.S. House of Representatives just held a continue to be a cornerstone of actions 6. FALSE. Another matter high on the
hearing on predispute arbitration. We don’t against car dealers by the FTC. agenda of regulators, particularly Federal
want to suggest bias of the organizers, but Trade Commissioners who will soon con-
the title for it was “Justice Restored: Ending Compliance with the trol the agency under the new administra-
Forced Arbitration and Protecting Funda- tion, is spot delivery. Carefully observe cus-
mental Rights”. There is nothing “forced” Truth in Lending Act and tomer rights in spot deliveries. If you must
about predispute arbitration, since forced the Consumer Leasing Act take back the vehicle you delivered, you are
arbitration would be ruled unenforceable are critical because both rescinding the contract. In other words, you
by a judge or an arbitrator. A consumer or are returning the dealership and the buyer
an employee voluntarily enters an arbitra- laws are clear. to the beginning as if the transaction had
tion agreement. Whether it will survive a not even occurred, to the extent possible.
challenge depends upon its terms and how If an APR is only available for loans of limit- That means that not only must the custom-
it is implemented. The agreement must be ed duration, that must be disclosed to meet er give back the car you delivered, you must
fair and balanced. It must be supported by the general requirements of the FTC Act give back the trade and any downpayment.
consideration. When these requirements that terms and conditions of offers must be If you do not do that, or you cannot do that,
are observed, an arbitration agreement is fully disclosed. If the limitation is a trigger then you cannot “rescind” the transaction.
likely to survive a challenge. term (for example, “up to 36 months”), the
duration disclosure then requires the fol- 7. FALSE. Having decided that you can re-
Predispute arbitration agreements have not low-on disclosures. In advertising credit in scind, the recovery service could not locate
yet been outlawed by federal action. A dealer connection with a motor vehicle, any of the the vehicle. Now what do you do? Often,
in a state that allows predispute arbitration following is a trigger term: the decision is made out of frustration. The
who wishes to enjoy the protections of pre- customer was not candid when he bought
dispute arbitration in consumer matters and (1) The amount of the downpayment the car, or he has not been cooperative in
employment matters is still free to do so. (expressed as either a percentage or dollar working with the dealership, or he appears
amount); to be hiding the vehicle. The first reaction is
2. FALSE. With the rise of the social justice (2) The amount of any payment (expressed likely to be “Let’s show him! Let’s report the
movement under the Biden administration, as either a percentage or dollar amount); car as stolen.” That is the wrong reaction.
dealer finance reserve is likely to come un- (3) The number of payments or the period
der heavy scrutiny again. While Congres- of repayment; or The car was not stolen. You gave the cus-
sional prohibition of CFPB action will pre- (4) The amount of any finance charge. tomer possession of the vehicle under the
vent the Bureau from taking action in this transaction documents. Even a misde-
area, private litigants, state attorneys general, If you use a trigger term, you then must meanor charge of wrongful use may lead
the U.S. Department of Justice, and the Fed- disclose: to a malicious prosecution lawsuit since the
eral Trade Commission can all enforce equal • The amount or percentage of the down- customer is operating on legally issued doc-
credit laws. And it is not only finance re- payment; umentation, even if overdue. Even if you
serve that will be at issue. Practices in selling • The terms of repayment; and win the suit, the publicity about the events
voluntary protection products are not only • The "annual percentage rate," using that will likely damage the dealership.
potential subjects of legal action by these term or the abbreviation "APR." If the
enforcers, the CFPB is not prohibited from annual percentage rate may be increased The answer is a civil suit to recover the ve-
investigating VPP practices. It was doing so after consummation of the credit transac- hicle. The dealership then can quickly ob-
before the change in administrator of the tion, that fact also must be stated. tain a judgment it can use as the basis for
Bureau during the Trump administration. discovery from the customer to find the ve-
4. FALSE. Under the Truth in Lending Act, hicle and to potentially recover damages if
If your dealership is not using a fair lending the annual percentage rate is not a trigger the car can never be found or to recover the
program and a program for sale of volun- term. You must make further disclosures dealership’s losses for the period the vehicle
tary protection products that requires of- under TILA only if an advertisement em- was withheld.
fering finance rates and VPPs at uniform ploys a trigger term. Continued on next page

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