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THE CARLAWYER ©

The CARLAWYER ©

By Thomas B. Hudson and Nicole F. Munro
Here’s our monthly article on legal consumer loans that the loans contained and, just last month, the Bureau filed an
developments in the auto sales, finance “no hidden fees.” According to the FTC’s amicus brief in a Fair Debt Collections
and leasing world. This month, the action complaint, when loan funds arrived in Practices Act case before the U.S. Court of
involves the Consumer Financial Protection consumers’ bank accounts, they were short Appeals for the Seventh Circuit.
Bureau, the Federal Communications of the amount expected by consumers
Commission, the Office of the Comptroller because of a hidden up-front fee the Attention! On May 11, the OCC issued
of the Currency (OCC), the Federal Trade company deducted from consumers’ loan the “Military Lending Act” booklet of the
Commission (FTC), the Government proceeds. The FTC also alleged that Comptroller’s Handbook for use by its
Accountability Office and the President. Lending Club falsely represented that examiners when assessing compliance
As usual, this month’s article features our consumers’ applications had been approved with the MLA. The booklet reflects
“Case of the Month.” by telling consumers, for example, that the Department of Defense’s July 2015
“Investors Have Backed Your Loan,” while amendments and its interpretive rules
Note that this column does not offer legal knowing that many applicants would not published in August 2016 and December
advice. Always check with your lawyer to qualify for a loan. In addition, Lending Club 2017. The booklet includes, among
learn how what we report might apply to allegedly withdrew double payments from other things: (1) the expansion of MLA
you, or if you have questions. consumers’ bank accounts and continued protections to a broader range of consumer
to charge those who cancelled automatic credit products; (2) rules for determining the
THIS MONTH’S CARLAWYER © payments or paid off their loans. Finally, fees and charges included in the calculation
COMPLIANCE TIP the FTC alleged that the company failed to of the military annual percentage rate and
Are you completing your credit contracts obtain consumers’ acknowledgements of its for calculating the MAPR; (3) the optional
and other deal documents correctly? information-sharing policy. safe harbor methods for identifying
Have your completion instructions been covered service members and dependents;
approved in writing by knowledgeable Here Come the Rules! On May 10, the (4) disclosures that creditors are required
counsel? If not, take a gander at our Case Bureau released its Spring 2018 rulemaking to provide to covered borrowers; and (5)
of the Month for an example of the sort of agenda, announcing a goal of proposing limitations on consumer credit extended to
mischief an erroneously-completed form a debt collection rule by the first quarter covered borrowers.
can create. of 2019. The Bureau has already engaged
in some early-stage debt collection Will Somebody Answer That? On
FEDERAL DEVELOPMENTS rulemaking activities under its Dodd-Frank May 14, following the recent decision of
We Don’t Need No Stinkin’ Guidance. Act authority to issue rules interpreting the the U.S. Court of Appeals for the D.C.
On April 18, the U.S. Senate passed a joint Fair Debt Collection Practices Act. The Circuit in ACA International v. FCC,
resolution using its powers under the Bureau indicated that the proposed rule the FCC is seeking public comment on
Congressional Review Act to vacate the may address communication practices and several significant issues related to the
Bureau's March 2013 guidance for indirect consumer disclosures. The Bureau did interpretation and implementation of the
auto lenders on compliance with the Equal not mention a schedule for when it might Telephone Consumer Protection Act.
Credit Opportunity Act and Regulation address "right consumer, right amount"
B. In December 2017, the Government rules. Under Cordray, the Bureau had CASE OF THE MONTH
Accountability Office concluded that the decided to split up the rulemaking, moving Dealers complain that some legal violations
CFPB's guidance was, when issued, a rule forward with rules related to collection are merely “technical.” That’s true – the
subject to the CRA. The House passed the practices and consumer disclosures and federal Truth in Lending Act is a rat’s nest
resolution, and on May 21, President Trump delaying "right consumer, right amount" of technical requirements, and some of
signed it. While there is some uncertainty rules to get more input from all market them are easy to violate. Here’s an example.
about the effect of the repeal, this one participants, but the status of these rules
appears to be a positive development for is unclear. Although this is the first Susana Mendoza bought a vehicle from
the industry. formal, public action the Bureau has taken Sidney Auto Sales, Inc., and financed the
regarding debt collection rulemaking since purchase by signing a retail installment
FTC Doesn’t Want to Join Lending Club. Mulvaney began leading the Bureau, debt contract. The RIC contained disclosures
On April 25, the FTC filed a complaint collection has been a focus for Mulvaney required by the Truth in Lending Act. The
against Lending Club Corporation for since he took control of the agency. He has disclosures included a payment schedule
making deceptive claims in its online previously highlighted the high volume of providing for 29 monthly payments of
and mail advertisements for unsecured consumer complaints about debt collection, $351.58 beginning on January 20, 2017, and

42 | GIADA Independent Auto Dealer JUNE 2018