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 21 new jersey auto retailer W W W . N J C A R . O R G discrimination case under a statute like the Equal Credit Oppor- tunity Act (“ ECOA ”). However, ECOA was not at issue in the case. ECOA prohibits “any creditor to discriminate against any applicant with respect to any aspect of a credit transaction.” But ECOA does not prohibit acts that “otherwise make unavailable” credit to protected classes, as does the Fair Housing Act, which was at issue in the case. It was this language that the Supreme Court ruled picks up disparate impact credit discrimination. The Supreme Court has not ruled on whether ECOA prohibits disparate impact. FTC FTC Commissioners serve staggered terms. No more than three Commissioners can be of the same political party. Two Repub- lican Commissioners will have their terms expire in 2023 and 2024, respectively. When replacing a Commissioner, including a Democratic Commissioner as will occur in 2022, it is reasonable to believe that a Biden administration will appoint someone more leftward leaning than a Republican President. Over time, this could lead to a more activist FTC, including against auto dealers and auto finance about which the FTC has held hearings. FTC staff members may also turn over, and it is not unreasonable to believe that more liberal replacements may be appointed. Ex- pect the FTC to be more active during the Biden administration, although how soon and how much so will remain to be seen. The Department of Justice ( DOJ ) The DOJ has brought criminal actions against auto dealers, their owners and their employees for bank fraud, interstate wire fraud, and other federal criminal law violations. Several dealer principals and F&I personnel have served jail terms for defraud- ing federally regulated lenders by submitting falsified credit applications, power booking, and other fraudulent behavior. President Biden appointed Merrick Garland as Attorney Gener- al to head the Department of Justice. It is reasonable to expect that senior levels in the DOJ may likewise move to the left. This could result in more investigations, enforcement actions, and criminal proceedings against auto dealers who falsify docu- ments and misrepresent transaction information to lenders. State Attorneys General The CFPB and state Attorneys General ( AGs ) act in close concert on consumer protection matters. During the Trump administration, many enforcement actions against auto dealers originated with state AGs. An activist CFPB and aggressive AGs can be expected to pursue more claims against auto dealers. Your state AG is the most likely regulator you will encounter. It is critical that you have a policy and procedure for addressing consumer complaints. Use this procedure for every consumer complaint. Remember that even a small complaint can become a big problem if the consum- er reports it to the Attorney General. What’s a Dealer to Do? If you have put compliance on the back burner during the Trump administration, now is the time to get prepared, review and update your policies and train/retrain your employees. A checkup with your legal or compliance advisor is an excellent idea. The Biden administration is likely to focus on safeguards and privacy, so make those first on your list. Review your privacy notice and make sure it states what your actual sharing practices are. Consumer protection in sales and F&I will be another area for activist agencies. If you have not already done so, adopt and implement the NADA Fair Credit Compliance Program and the NADA Voluntary Protection Products policy and program. In recent enforcement actions, the FTC has made dealer princi- pals jointly and personally liable with the dealership for viola- tions, including broad unfair and deceptive practices violations. This trend will continue. That should be reason alone for your senior management to give priority to compliance. Randy Henrick is an auto dealer compliance expert who provides compliance consulting services to dealers directly at AutoDealerCompliance.net. He served for 12 years as Dealertrack’s lead regulatory and compliance attorney and wrote all of its Compliance Guides. The Biden Administration is likely to focus on safeguards and privacy, so make those first on your list. Review your privacy notice and make sure it states what your actual sharing practices are.
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