Page 38 - GIADA-April-2018

THE CARLAWYER ©

The CARLAWYER ©

By Thomas B. Hudson and Nicole F. Munro

Here’s our monthly article on legal Pennsylvania, Virginia, New York, and collected as part of the challenged practices.
developments in the auto sales, finance and Illinois, have already been ramping up The orders against Travell Thomas, 4 Star
lease world. This month, we’re reporting their own enforcement efforts in consumer Resolution LLC, Profile Management
on activities of the Consumer Financial financial protection matters. We expect the Inc., International Recovery Service LLC,
Protection Bureau, the Federal Trade number of state civil investigative demands Check Solutions Services Inc., Check
Commission and the courts. As usual, this and enforcement actions to continue to Fraud Service LLC and Fourstar Revenue
month’s article features our “Case of the increase. Management LLC and against Maurice
Month.” Buy-here, pay-here dealers and Sessum impose a $30 million judgment.
finance companies should pay particular Complain, Complain, Complain. On March The order against Charles Blakely III and
attention to all of this month’s activity 1, the FTC released its 2017 Consumer Merchant Recovery Service, Inc. imposes
involving debt collection. Sentinel Network Data Book. The Data an $18,789,000 judgment. Both judgments
Book includes complaints from 2.68 will be partly suspended upon the surrender
Note that this column does not offer legal million consumers, a decrease from 2016. of certain assets. Assets to be surrendered
advice. Always check with your lawyer to Debt collection remained the top consumer in these settlements include more than $1
learn how what we report might apply to complaint category, and complaints about million in corporate and individual assets
you, or if you have questions. identity theft and imposter scams were the frozen by the court. The full judgments will
second and third most common types of become due immediately if the defendants
This Month’s CARLAWYER consumer complaints. are found to have misrepresented their
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Compliance Tip financial conditions. The action resulted in
If you collect payments from your auto Report Card Time. On March 20, the 14 guilty pleas from individuals involved in
finance customers, it is time to review CFPB issued its annual report to Congress the scheme, including Travell Thomas and
and refresh all your policies, forms and on the Fair Debt Collection Practices Act. Maurice Sessum, each sentenced to more
procedures relating to that activity. It is The report details the CFPB’s and FTC’s than 7 years in prison.
clear from recent developments that the enforcement activities, education activities,
CFPB and state attorneys general have debt and policy initiatives conducted in 2017 This Just In. On Friday, March 23, Sen.
collection abuses targeted, so you should related to unlawful debt collection. The Jerry Moran (R-KS) and 15 Republican
be prepared to demonstrate that your agencies share enforcement responsibilities co-sponsors introduced a joint resolution
compliance efforts are what they should be. under the FDCPA, and in 2012 entered pursuant to the Congressional Review Act
Get your counsel involved in the effort – into a memorandum of understanding that would invalidate the CFPB’s 2013 auto
the law has been fluid in this area recently, providing for coordination of enforcement, finance guidance relating to fair lending
and you’ll need some professional help. sharing of supervisory information and and disparate impact. The joint resolution,
consumer complaints, and collaboration on if passed by the Senate and the House and
Federal Developments consumer education. signed by the president, would effectively
It’s Your Turn. On February 28, during preclude the CFPB from any rulemaking
a state attorneys general conference, Collection Violations Draw Stiff Penalties. on this topic without express authorization
CFPB Acting Director Mick Mulvaney On March 22, the FTC and the New York from Congress at some later date.
encouraged state AGs to take the lead in Attorney General’s Office announced a
enforcement as the CFPB takes a closer settlement order banning the operators So, there’s this month’s report. See you next
look at its own enforcement role. The of a deceptive and abusive debt collection month!
statements followed an internal memo scheme from the debt collection business
Mulvaney circulated stating that the CFPB and from buying or selling debt. The Case of the Month
would no longer be "pushing the envelope" agencies alleged that the defendants used Edwin Rojas bought a used car from X
and would try to refrain from " regulation threats and abusive language, including false Motorsport, Inc. He signed a buyer’s order
by enforcement." Emphasizing that memo’s threats that consumers would be arrested or and a retail installment contract at the time
themes, Mulvaney also said that the CFPB sued, to collect supposed debts. The court of the sale. The buyer’s order explicitly
would prioritize enforcement where halted the operation pending resolution incorporated the RIC and voided Rojas’s
complaint volumes are highest (currently, of the case. The orders also prohibit the obligation to buy the car if his financing
that area is debt collection) and would focus defendants from misrepresenting financial was not approved. Rojas drove the car off
more resources on consumer education. products and services and from profiting the lot the same day. Capital One, a finance
State AGs, such as those in Massachusetts, from customers’ personal information company, refused to buy Rojas’s RIC. Rojas

36 | GIADA Independent Auto Dealer APRIL 2018