Renewed Focus on CFPB’s Regulatory Powers Should Focus Dealer Attention

DPG News and Information

Few ever believed that legal and regulatory compliance for today’s automobile dealer ever really lessened during the Trump Administration. Those who put in place policies, procedures, and had human and technology resources devoted to operating their business to the best of their ability to meet all local, state, and national laws and rules could at least sleep a little easier.

Following the November 2020 General Election, most experts and experienced dealers, especially those in the BHPH industry, felt that there would be more regulatory scrutiny of the industry from the likes of Federal Trade Commission and the Consumer Financial Protection Bureau.

They were right.

The Biden administration appointed Rohit Chopra, a former Democratic member of the FTC, and a strong proponent of greater regulatory control of banks and lending institutions, to head up the CFPB. He was confirmed by the U.S. Senate in October 2021.

Since then, the CFPB has issued numerous press releases and policy announcements regarding oversight of everything from housing, mortgages, medical debt, student loans, and so much more. A cursory glance at the long list of recent press releases, should give us pause.

But, if you’re in the automobile finance industry and finance subprime deals, you should take special note. 

For instance: 

Just last week, the CFPB announced “changes to its supervisory operations to better protect families and communities from illegal discrimination, including in situations where fair

lending laws may not apply.”

To thwart “unfair discrimination in consumer finance,” the Bureau would expand its anti-discrimination efforts to combat discriminatory prices “across-the-board” in consumer finance. 

This will include closely examining a financial institution’s decision making processes in advertising, pricing, and other areas to ensure that companies are appropriated testing for a eliminating illegal discrimination.

It should be easy to make sure that there is not discrimination in your business as to race, religion, gender, or any other protected class. Put written policies, procedures, and practices into place, train employees on them, then follow up to inspect what you expect. NADA’s Fair Credit Compliance Policy & Program can be a useful resource to you in implementing proven fair lending policies and procedures.  

Non-compliance can be costly and could result in large litigation costs and fines. So, stay out the regulators’ and plaintiffs’ lawyers’ cross-fire.  Don’t delay.