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COMPLIANCE TIPS

Here’s our monthly article on legal de- The CARLAWYER ©
velopments in the auto sales, finance
and lease world. Last month’s report was
skimpy, but this month’s is skimpier yet. BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO
The Consumer Financial Protection Bu-
reau seems to have dug a foxhole and
pulled the sod in on top of itself. That For federal and state regulators, dealer- consumers. In all, consumers who bought
doesn’t mean that the CFPB is inactive, ship ads are the lowest-hanging fruit. A affected “clean diesel” vehicles will re-
though. Instead of pressing with new photocopy of a newspaper ad or a screen ceive up to $11.5 billion, and the court
rules and high-profile enforcement ac- shot of a website is all the proof needed may hold Volkswagen in contempt if it
tions, the Bureau seems to be focusing to show many violations. Once a dealer- makes deceptive environmental claims in
hard on supervisory activities. That ship’s obviously noncomplying ad is chal- the future.
makes sense, since supervision isn’t in lenged, the only question remaining is
the public eye and is a lot less likely to the number of zeroes needed to complete Hold On to Your Wallet! The FTC held
draw fire from Congressional Repub- the check the dealership writes to pay the a conference in Washington, D.C, on
licans and other CFPB critics. In any assessed penalty. May 24 that examined the state of iden-
event, this month’s article features our tity theft now and how it may evolve in
“Case of the Month,” activity from the Where do your ads come from? Do you the future. The “Planning for the Future”
CFPB, the Federal Trade Commission buy ad programs from a vendor, or do event brought together industry repre-
and two state attorneys general. you craft the ads yourself? If you use a sentatives, consumer advocates, govern-
vendor, what written assurances about ment officials, and others.
Why do we include items from other compliance do you demand before you
states? We want to show you legal devel- sign the vendor’s contract? If you are do- The conference included panel discus-
opments and trends. Also, another state’s ing the ads yourself, how much do you sions on how identity thieves acquire and
laws might be a lot like your state’s laws. know about the federal and state laws that use consumer information, how websites
If attorneys general or plaintiffs’ lawyers regulate your ad content? If you’re just trade in stolen consumer information,
are pursuing particular types of claims in duplicating ads from another dealership the impact of identity theft on financial
other states, those claims might soon ap- that you picked up at your last 20-group services, health care and other sectors,
pear in your state. meeting, you probably need to be in an- the challenges identity theft victims face,
other business. and resources available to them. FTC
Note that this column does not offer le- technical experts described how consum-
gal advice. Always check with your law- Federal Developments er data available online is used by mali-
yer to learn how what we report might cious actors.
apply to you, or if you have questions. VW Clean Diesel Claims. On May 17,
the FTC announced that a federal dis- State Developments
Thomas B. Hudson trict court judge in San Francisco signed
Partner, Hudson a settlement negotiated by the FTC and The attorneys general for Massachusetts
Cook, LLC private plaintiffs providing for consum- and Delaware have settled charges against
thudson@hudco.com er redress and starting the formal claims a major finance company arising from
process for owners of Volkswagen, Audi, the company's subprime auto financing
and Porsche 3.0 liter TDI diesel cars. The operations. The AGs had alleged that the
settlement deals with Volkswagen’s al- company funded auto loans (both AGs
legedly misleading “clean diesel” claims. used the term "loans" to refer to what
The FTC will monitor VW’s compliance were undoubtedly retail installment con-
with the settlement’s provisions, which tracts) without having a reasonable basis
Nicole Frush include special protections for those in to believe that the borrowers could afford
Munro the armed forces and rural consumers them and knew that the reported incomes
Partner, Hudson who may be far from the nearest dealer. used to support credit applications sub-
Cook, LLC Under the 2.0 liter and 3.0 liter settle- mitted to the company by car dealers
nmunro@hudco.com
ments, Volkswagen will offer consumers were incorrect and often inflated. The
over $11 billion in compensation. The Massachusetts AG's Office found that the
FTC announced in February that con- company's own internal audit conclud-
sumers who bought 3.0 liter vehicles will ed that the company's oversight of auto
receive up to $1.2 billion in compensation dealer conduct when making subprime
in addition to the more than $10 billion loans was inadequate. Despite identify-
redress fund already created for 2.0 liter ing a group of dealers that had extremely
38 | GIADA Independent Auto Dealer JUNE 2017