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THE CARLAWYER ©

The CARLAWYER ©

By Eric Johnson and Tom Hudson

We hope you and your loved ones make On July 10, the CFPB released a report American testers to fund down payments
it through the summer virus free. Like examining recent trends in debt settlement in a lump sum, requiring larger down
you, we long for a normal fall, but the and credit counseling. The report shows payments from African-American
odds of that seem a bit slim. Like last that nearly 1 in 13 consumers with a testers than white testers, quoting higher
month, there isn’t a great deal going credit record had at least one account biweekly payment amounts to African-
on this month by way of business and settled through a creditor or had account American testers on buy-here, pay-here
legal developments, but there have been payments managed by a credit counseling retail installment contracts than to white
a few. Here’s our monthly article on agency from 2007 through 2019. Since testers, and making other statements to
selected legal developments we think 2016, the number of debt settlements has discourage African-American testers.
might interest the auto sales, finance, increased steadily, while credit counseling
and leasing world. This month, we note numbers are relatively unchanged. The settlement requires the defendants to
developments at the Consumer Financial develop and implement a written policy
Protection Bureau and the Department of CFPB Ratifies Prior Actions to Provide designed to prevent discrimination
Justice. Certainty in Light of Seila Law. On July 7, and ensure compliance with the
the CFPB ratified most regulatory actions ECOA and requires the defendants,
As usual, our article features the “Case of it took from January 4, 2012, through June their principals, and any employees or

the Month” and our “Compliance Tip.” 30, 2020, to provide certainty that those agents participating in the origination,
Note that this column does not offer legal actions are valid in light of the Supreme processing, underwriting, or servicing of
advice. Always check with your lawyer to Court’s recent decision in Seila Law LLC credit transactions to undergo training on
learn how what we report might apply to v. CFPB. In Seila Law, the Supreme Court ECOA requirements. The defendants also
you or if you have questions. held that the CFPB’s leadership structure must engage in ongoing recordkeeping
is unconstitutional but that the Consumer and reporting to the DOJ.
Federal Developments Financial Protection Act’s provision
limiting the President’s ability to remove Case of the Month
CFPB Seeks Input. On July 24, the the CFPB’s director is severable from the
CFPB announced that it plans to rest of the law. Therefore, the agency can Buyer Stated Claim Under Missouri
issue an advance notice of proposed continue to operate, but its director must Law that Installment Contract Assignee
rulemaking on consumer-authorized be removable by the President at will. Was Liable for Dealer’s Failure to
access to financial records in order to Provide Him with Vehicle Title: When
solicit stakeholder input on ways it might DOJ Settles ECOA Claims Against Used the dealership where a buyer bought a car
effectively and efficiently implement Car Dealership. On July 2, the DOJ failed to provide him with the title to the
the financial access rights described in announced a settlement with a Maryland vehicle as required by state law, he sued
Section 1033 of the Dodd-Frank Act. This used car dealership and its owner and the dealership and the assignee of his
follows a CFPB symposium that included manager, resolving allegations that the retail installment contract for violating
experts from consumer groups, fintechs, dealership violated the Equal Credit the Missouri Merchandising Practices
trade associations, financial institutions, Opportunity Act by discriminating Act. The trial court entered a default
and data aggregators. The CFPB also based on race in credit transactions with judgment for the buyer on his MMPA
released a summary of the symposium consumers. The lawsuit is based on the claim against the dealership. However,
proceedings. results of testing conducted by the DOJ’s the trial court granted the assignee’s
Fair Housing Testing Program, in which motion to dismiss the MMPA claim.
CFPB Holds Symposium on Use of individuals pose as prospective car buyers
Cost-Benefit Analysis for Consumer to gather information about possible The Court of Appeals of Missouri
Protection Regulations. On July 29, the discriminatory practices. Specifically, reversed the dismissal of the MMPA
CFPB held a symposium discussing the the complaint alleged that the defendants claim against the assignee. The appellate
use of cost-benefit analysis in developing offered more favorable finance terms to court concluded that, under Missouri
consumer financial protection white testers than to African-American law and the Federal Trade Commission’s
regulations. testers with similar credit characteristics, Holder Rule, the buyer stated an MMPA
including giving white testers the claim against the assignee because of its
CFPB Report on Trends in Debt option to fund down payments in two status as the dealership’s assignee and
Settlement and Credit Counseling. installments while requiring African- holder of the RIC. The court determined

30 | GIADA Independent Auto Dealer SEP/OCT 2020