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of the Dodd-Frank Act’s prohibition on and Representations that Predated formation, interpretation, and enforcement
engaging in unfair, deceptive, or abusive Signing of Lease Agreement Containing of the lease agreement that contains the
acts or practices when repossessing Broad Arbitration Clause: A lessee sued arbitration clause at issue ... and do not exist
consumers’ vehicles. Noting the recent his lessor for false advertising, fraudulent independent of that agreement.” See Boehm
strong demand for used vehicles, the concealment, and violation of consumer v. VW Credit, Inc., 2022 U.S. Dist. LEXIS
CFPB stated that it is “concerned that these protection statutes in connection with 8744 (D. Neb. January 18, 2022).
market conditions might create incentives its advertising and representations made
for risky auto repossession practices, since during the negotiation process. The lessor COMPLIANCE TIP
repossessed automobiles can command moved to compel arbitration pursuant to
higher prices when resold.” The CFPB is an arbitration agreement that the lessee Last month’s Federal Development
issuing the bulletin to mitigate the harms signed as part of the lease transaction. regarding the FTC Advisory Opinion on
from these risks. The bulletin summarizes The U.S. District Court for the District Recovery of Attorneys’ Fees and Costs
the UDAAP law and highlights relevant of Nebraska granted the motion. The Under Holder Rule and our Case of the
examples of conduct observed during lessee argued that because his claims arose Month on arbitration showcase why a
supervisory examinations or enforcement before and during the negotiation process, dealer should start using a properly drafted
investigations related to repossessions they were not subject to the arbitration arbitration agreement, if it isn’t already
that the CFPB considered to be UDAAPs, agreement that he signed thereafter. The doing so. Although the FTC’s Advisory
including: (1) repossessing vehicles from court found that the broad arbitration Opinion is not binding on the courts, a
car owners who made payments sufficient agreement, which applied to any claim court may find the FTC’s opinion that
to bring the account current, who entered that “arises out of or relates to your that Holder Rule does not impose a limit
into a payment plan, or who made promises credit application, lease, or condition of on a consumer’s ability to recover their
to pay by a certain date and the date had not this Vehicle, this Lease or any resulting attorneys’ fees and costs as very persuasive.
passed when the repossession occurred; transaction or relationship,” covered the In addition, the FTC’s advisory opinion
(2) repossessing vehicles from car owners lessee’s claims that he was induced to could mean more plaintiff’s cases against
when the servicer incorrectly noted enter into the lease based on the lessor’s your dealership as plaintiff’s attorneys
that the account was delinquent, when advertisements and/or representations may now be more willing to bring a claim
servicer representatives failed to cancel made during the lease negotiation process. if their odds of getting their attorneys’ fees
repossession orders that had previously The court rejected the lessee’s argument that and costs paid are better than before. n
been communicated to repossession the arbitration agreement must specifically
agents, or when repossession agents failed state that it applies retroactively in order For information, visit counselorlibrary.com.
to confirm that the repossession order was for it to apply to claims that predate the ©CounselorLibrary.com 2022, all rights
still active prior to repossessing a vehicle; execution of the agreement where his reserved. Single publication rights only to the
(3) repossessing vehicles subject to the “claims are inextricably linked to the Association. HC# 4883-5290-5483
automatic stay in a car owner’s bankruptcy
case; (4) repossessing vehicles by failing
to provide car owners with accurate Auto Dealer/Garage
information about the amount required to
bring their account current; (5) applying
payments in a different order than disclosed Insurance Specialists
to car owners, resulting in repossession; (6)
charging car owners for unnecessary force-
placed insurance, resulting in additional * Garage and Automobile Liability *
fees that push car owners into default and * Dealer Physical Damage *
repossession; (7) refusing to return car * Garagekeepers *
owners’ personal property from repossessed * Work Comp *
vehicles unless car owners paid a fee; and
(8) charging collateral protection insurance * Quick Quote Turnaround *
after repossession. In the bulletin, the CFPB
recommends certain actions that can be
taken to prevent such UDAAP violations
when repossessing vehicles.
CASE(S) OF THE MONTH Telephone: 215-860-6510 Website: www.aatins.com

Langhorne, Pennsylvania
Court Compelled Arbitration of Lessee’s
Claims that Arose from Advertisements Your One-Stop Shop for Auto Dealer Insurance

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • APRIL 2022 | 13