Page 12 - MIADA-Q12023

THE CARLAWYER ©

The CARLAWYER ©

By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®

voluntary nature of add-on products." ensured that the complaint is consistent
The complaint also alleges that CAC with the documentation; (3) dismiss any
"violated New York Executive Law pending collection lawsuit if it does not
§ 63(12) by engaging in repeated certify its compliance with the specified
and persistent fraudulent and illegal documentation and meaningful attorney
conduct, including misstating the cost review requirements within 120 days
of credit, entering into unconscionable of the court entering the order; and (4)
contract terms, and violating the state- pay a $100,000 penalty to the Bureau.
law statutory disclosure regimes set Noting that Forster & Garbus brought
out in the New York Personal Property the allegedly illegal lawsuits on behalf of
Here’s our monthly article on selected Law. CAC likewise violated New York companies like Discover and Citibank,
legal developments we think might General Business Law § 349 by engaging CFPB Director Rohit Chopra stated
interest the auto sales, finance, and leasing in these same deceptive business in the news release announcing the
world. This month, the developments practices." Finally, the complaint alleges settlement that "[t]he CFPB will be
involve the Consumer Financial that because CAC allegedly violated the scrutinizing large financial companies
Protection Bureau, New York attorney CFPA and New York law, it also violated that enlist debt collection outfits
general, Office of the Comptroller of New York's securities fraud law. operating lawsuit mills."
the Currency, and the National Credit
Union Administration Board. As usual, On January 11, the Consumer Financial On January 11, the Consumer Financial
our article features the “Case(s) of the Protection Bureau announced a Protection Bureau announced a
Month” and our “Compliance Tip.” Note proposed settlement with Forster & proposed rule that would require
that this column does not offer legal Garbus, LLP, resolving allegations nonbanks subject to its supervisory
advice. Always check with your lawyer that the law firm used illegal debt authority, with limited exceptions,
to learn how what we report might apply collection practices in violation of the to register each year in a public
to you or if you have questions. Fair Debt Collection Practices Act and registration system established by
the Consumer Financial Protection the Bureau if they use certain terms
FEDERAL DEVELOPMENTS Act's prohibition against deceptive and conditions in form contracts for
acts and practices. The Bureau alleged consumer financial products and
On January 4, the Consumer Financial that, from 2014 through 2016, the services that seek to waive consumer
Protection Bureau and the New York law firm filed debt collection lawsuits rights or other legal protections or
attorney general filed a lawsuit against against consumers without the requisite limit the ability of consumers to
Credit Acceptance Corporation in documentation supporting the debt and enforce or exercise their rights. The
connection with its financing of falsely represented to consumers that specific terms and conditions defined
consumers' used vehicle purchases. attorneys were meaningfully involved in the proposed rule include waivers of
Specifically, the complaint alleges that in the preparing and filing of lawsuits. claims a consumer can bring in a legal
CAC "engaged in deceptive and abusive If approved by the court, the order action; limits on a company's liability
acts or practices in violation of the would require Forster & Garbus to: (1) to a consumer; limits on a consumer's
Consumer Financial Protection Act of retain specific documents supporting ability to bring a legal action by dictating
2010 ... by obscuring the cost of credit the debt before filing a debt collection the time frame, forum, or venue for
for auto loans and taking unreasonable lawsuit, including the name of the a consumer to bring a legal action;
advantage of consumers' lack of original creditor, evidence that the limits on the ability of a consumer to
understanding of the risk of default consumer authorized the debt, the bring or participate in a class action;
and the severity of the consequences, chain of title supporting any sale of the limits on the ability of a consumer
as well as their inability to protect their debt, and a breakdown of how the debt to file complaints or post reviews;
interests, and for providing substantial amount was calculated; (2) certify that certain other waivers of consumer
assistance to dealers, even though an attorney whose name will appear rights or other legal protections; and
CAC knew or should have known on the complaint has reviewed the arbitration agreements. The specified
the dealers were misrepresenting the documentation supporting the debt and terms and conditions would be covered

12 | MSIADA MISSISSIPPI DEALER Q1 2023