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THE CARLAWYER

The CARLAWYER ©

By Thomas B. Hudson and Nicole F. Munro
Here’s our monthly article on legal Department released a report examining the discuss better ways to identify and measure
developments in the auto sales, finance and CFPB’s arbitration rule, which would have consumer injuries that result from the misuse
lease world. This month, we’re covering effectively prohibited mandatory arbitration of consumers’ personal information. The
actions of the Consumer Financial Protection clauses in consumer financial contracts. The FTC is seeking comment on issues including:
Bureau, the Federal Trade Commission, report determined that: • What are the qualitatively different
the Justice Department, the Senate, and • the CFPB’s rule would impose types of consumer injuries from privacy
the President. As usual, this month’s article extraordinary costs by generating and data security incidents?
features our “Case of the Month.” more than 3,000 additional class • What frameworks might we use to
action lawsuits over the next five years, assess these different injuries, and how
Why do we include items from other states? imposing more than $500 million do we quantify injuries?
We want to show you legal developments and in additional legal defense fees, and • How do businesses evaluate the
trends. Also, another state’s laws might be a transferring $330 million to plaintiffs’ benefits, costs, and risks of collecting
lot like your state’s laws. If attorneys general lawyers; and using consumer information in
or plaintiffs’ lawyers are pursuing particular • the CFPB’s data show that the majority light of potential injuries?
types of claims in other states, those claims of consumer class actions deliver no • How do consumers evaluate the benefits,
might soon appear in your state. relief to the class members, and few costs, and risks of sharing information
consumers entitled to claim settlement in light of potential injuries?
Note that this column does not offer legal funds actually do;
advice. Always check with your lawyer to • the CFPB failed to consider whether Justice Reports to Congress. On September
learn how what we report might apply to improved arbitration disclosures would 28, the Justice Department released its
you, or if you have questions. serve consumer interests better than its annual report to Congress listing its 2016
ban; enforcement activities involving the Equal
This Month’s CARLAWYER • the CFPB did not adequately assess the Credit Opportunity Act, the Fair Housing
©
Compliance Tip share of class actions that are meritless; Act, and the Servicemembers Civil Relief
and Act. By the end of 2016, the DOJ had 33
The big news this month, discussed below, • the CFPB did not show that its rule open fair lending investigations related to
is the override of the CFPB’s new arbitration will improve financial institutions’ discrimination in mortgage lending, the sale
rule. That’s a real win for dealers who use compliance with federal consumer of manufactured homes, and auto financing.
mandatory arbitration agreements with financial laws. The report details the DOJ's Servicemembers
their car buyers to protect against class and Veterans Initiative, a pilot program
action lawsuits, as well as for those not The report concluded that the arbitration through which the DOJ funds Assistant
currently doing so but considering such use rule did not satisfy the statutory prerequisites U.S. Attorney and Division trial attorney
in the future. The CFPB’s anti arbitration for banning the use of arbitration agreements positions and designates military judge
campaign has been going on for several years. under the Dodd-Frank Act. advocates to serve as Special Assistant U.S.
During that period, many companies using Attorneys to support the DOJ in its SCRA
arbitration agreements have been reluctant to Perhaps partly in response to the Treasury enforcement efforts. The pilot program will
spend legal dollars to keep their agreements Department’s criticism, on October 25, be funded through the end of FY 2018. In
on the cutting edge of the law. After all, why the U.S. Senate passed a joint resolution to addition, the report discusses settlements
waste money if the CFPB is going to abolish invalidate the CFPB's rule. The late evening with several lenders for alleged violations
the use of the agreements? Now that we have vote was 51-50, with the vice president of the SCRA, including alleged unlawful
an industry victory for arbitration, dealers breaking the tie. Despite an eleventh hour foreclosures and auto repossessions.
using such agreements might want to make personal plea from Director Cordray to let Dealers with significant business with
sure their agreements reflect the latest legal the rule go into effect, the President signed servicemembers should take note of this
developments. The “Case of the Month,” the resolution on November 1, invalidating beefed-up enforcement capability.
discussed below, illustrates the value of an the rule and eliminating the CFPB’s ability to
effective arbitration agreement. promulgate another arbitration rule without Case of the Month
a new congressional mandate.
Federal Developments Brittany White and Steven Hefter bought
FTC Studying Data Security. The FTC a new car from Charlie, Inc., d/b/a Serra
CFPB’s Arbitration Rule Goes Down in recently announced a public workshop on Hyundai. They signed a retail buyers order,
Flames. On October 23, the Treasury December 12, 2017, in Washington, D.C., to Continued on page 38

36 | GIADA Independent Auto Dealer DECEMBER 2017