Pub 20-2021-2022 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 1 20 new jersey auto retailer What Auto Dealer Compliance Will Look Like in a Biden Administration BY RANDY HENRICK Joe Biden’s victory on November 3, 2020, likely will usher in a new era of consumer protection and auto dealers’ compliance challenges. Four out of the five Federal Trade Commission ( FTC ) Commissioners will have their terms expire during the Biden administration. President Biden will also have the power to replace the head of the Consumer Financial Protec- tion Bureau ( CFPB ). The Democrats will, for at least two years, control both the House and the Senate. The Democratic Party Platform stated that a Biden adminis- tration would work “to ensure equitable access to credit and banking products for all Americans and reinvigorate the CFPB to ensure that banks, financial institutions, and lenders cannot prey on consumers.” The platform also indicates Democrats will “eliminate the use of forced arbitration clauses.” Strong language is also given to protecting consumers’ rights to privacy and protecting consumers from data breaches. In short, every- thing is on the table. It is reasonable to expect changes in the automotive world to be evolutionary, not revolutionary. The Trump administration put new staffers at senior levels in the CFPB and FTC. While some of these people may leave or be replaced, there is not expected to be wholesale firing and replacement of Republican staffers. Here are some thoughts on what to expect: CFPB It is important to remember that Senator Elizabeth Warren, the original architect of the CFPB, will have an important voice in Biden administration policy. Warren raised concerns earlier this year about auto finance and has indicated her disdain for auto dealers in the past. “Auto dealers got a specific exemption from CFPB oversight, and it is no coincidence that auto loans are now the most troubled consumer financial product,” Warren said. “Congress should give the CFPB the authority it needs to supervise car loans — and keep that $26 billion a year in the pockets of con- sumers where it belongs.” The $26 billion per year is Warren’s estimate of total dealer participation, which Warren would like to eliminate. Warren is also closely aligned with Richard Cordray, who head- ed the CFPB during the Obama administration. You may recall that the CFPB under Cordray published the agency’s bulletin on auto finance, indicating that dealer participation resulted in disparate impact credit discrimination. In May 2018, Congress passed a joint resolution that was signed by President Trump disapproving the bulletin. Disparate impact credit discrimination involves factually neutral practices that have the effect of discrimination. Actual intent to discriminate is not required. Disparate treatment credit discrimination generally requires intent to discriminate. The U.S. Supreme Court, in 2015, decided the case of Texas Department of Housing vs. Inclusive Communities Project . This case appeared to make it harder to bring a disparate impact credit