The ABA Journal has begun accepting nominations for its ABA Journal Web 100.  The Web 100 honors blogs, law podcasts, and tweeters followed by lawyers.  It replaces the ABA’s Blawg 100 which was limited to the best legal blogs.  Our Consumer Finance Monitor was honored to be recognized by the Blawg 100 for five consecutive years and we would be grateful to be recognized by the Web 100 in 2018.

Our blog, among the first in the legal industry, was launched as the “CFPB Monitor” on July 21, 2011, the same day the CFPB was stood up, because we recognized right from the start that the CFPB was going to have an enormous impact on the consumer financial services industry and the lawyers who counsel members of that industry.  In February 2017, we renamed our blog the “Consumer Finance Monitor,” and expanded its coverage to include the many other federal agencies that regulate our industry as well as relevant state agency and attorney general developments.

We hope our readers not only find our blog to be a place where they can go to get up-to-the-minute reporting on important developments, but also a place where they can find informed analysis that helps them to understand the significance of those developments.

We also believe our blog has been a thought leader for our industry’s perspective on many key issues and has influenced the actions of lawmakers, most notably Congress’s use of the Congressional Review Act to overturn the CFPB’s arbitration rule and its auto finance guidance.  Here are links to some of our blogs on these issues as well as small-dollar lending and the ongoing battle over the CFPB’s constitutionality:

Director Cordray continues to doubt safety and soundness concerns are raised by the final arbitration rule

Treasury Department report eviscerates CFPB arbitration rule

Congress disapproves CFPB Bulletin concerning discretionary pricing by auto dealers

OCC small-dollar lending bulletin: one step forward but one step back?

Will the CFPB appeal Judge Preska’s ruling striking Title X?

If you enjoy following our blog and value the information it provides and its role in influencing the legal debate, we hope you will nominate us for the Web 100 by completing the ABA’s nomination form by Tuesday, August 7, 2018 at 11:59 p.m. CT.  (The ABA refers to nominations as “Web 100 Amici/Friend of the Web briefs.”)  The form will ask you to supply the Consumer Finance Monitor’s URL (which is: https://www.consumerfinancemonitor.com/) and a link to a recent blog post (you can use any of the posts above or another that you liked).

As always, we appreciate your support, and thank you for following Consumer Finance Monitor.

 

 

The CFPB announced last Friday that it had entered into a consent order with National Credit Adjusters, LLC (NCA), a privately-held company that owns several debt collection companies, and NCA’s former CEO and part-owner (CEO).  The consent order enters a $3.0 million judgment for civil money penalties against NCA and the CEO but suspends $2.2 million of the judgment based on the financial condition of NCA and the CEO. (NCA must pay $500,000 and the CEO must pay $300,000.)

According to the consent order, the CFPB found that NCA purchased consumer debts and used a group of debt collection companies (Agencies) to collect such debts.  Some of those companies engaged in frequent unlawful debt collection practices that harmed consumers, including by representing that consumers owed more than they were legally required to pay or by threatening consumers and their family members with various legal actions that NCA did not have the intention or legal authority to take.

The consent order also finds that the CEO determined which of the Agencies NCA would place debt with, which accounts the Agencies would collect on, and the terms under which the Agencies would collect.  NCA and the CEO continued to place debt with the Agencies for collection after NCA’s compliance personnel had recommended terminating the Agencies because of their illegal debt collection practices.  NCA also sold consumer debt to one of the Agencies as a means of convincing original creditors to approve NCA’s business practices and NCA and the CEO defended the Agencies when original creditors raised concerns about their collection practices.

The consent order makes the legal conclusions that NCA and the CEO, either through their actions or through the Agencies, directly violated the CFPA’s prohibition of unfair and deceptive acts or practices by inflating account amounts, making false threats to take legal action, and placing debts with the Agencies despite their illegal collection practices.  It also concludes that the inflation of account amounts and making of false threats by NCA, through the Agencies, constituted deceptive practices or the use of unfair or unconscionable means to collect debt in violation of the FDCPA and that such FDCPA violations also constituted violations of the CFPA.  The consent order finds further that NCA and the CEO not only directly violated the CFPA and FDCPA but also violated the CFPA by knowingly or recklessly providing substantial assistance to the unfair and deceptive collection acts and practices of the Agency to which NCA sold debts.

In addition to requiring payment of $800,000 of the judgment, the consent order prohibits NCA and the CEO from engaging in the illegal collection practices addressed by the consent order, permanently bars the CEO from working in any business that collects, buys, or sells consumer debt, and requires NCA to submit a comprehensive compliance plan to the CFPB that includes, at a minimum, certain specified elements.

It is noteworthy that, like the consent order announced last month by the CFPB that also involved alleged unlawful debt collection practices, the consent order with NCA and the CEO does not require refunds to be made to consumers.  In its Spring 2018 rulemaking agenda, the CFPB stated that it “is preparing a proposed rule focused on FDCPA collectors that may address such issues as communication practices and consumer disclosures.”  It estimated the issuance of a NPRM in March 2019.

 

 

A fifth amicus brief has been filed in support of All American Check Cashing and the other appellants in their interlocutory appeal to the U.S. Court of Appeals for the Fifth Circuit of the district court’s ruling upholding the CFPB’s constitutionality.

The brief was filed by the Cato Institute which describes itself as “a nonpartisan public policy research foundation dedicated to advancing the principles of individual liberty, free markets, and limited government.”

The CFPB’s brief is due to be filed by August 1.  We expect the brief to reveal the CFPB’s position on its constitutionality.

For our prior blog posts on All American Check Cashing’s principal brief and the four other amicus briefs, click here and here.

 

 

The CFPB will be one of the members of the new Task Force on Market Integrity and Consumer Fraud (Task Force) to be established by the U.S. Department of Justice (DOJ).  Last week, the DOJ announced that it was disbanding the Financial Fraud Enforcement Task Force, established under the Obama Administration, and pursuant to an Executive Order issued by President Trump, plans to establish the Task Force in its place.

The purpose of the Task Force, according to the DOJ press release, is to deter fraud on consumers, especially veterans and the elderly, and the government, specifically as it relates to health care.  The Task Force will provide guidance both for the investigation and prosecution of specific fraud cases and provide recommendations “on fraud enforcement initiatives.”

Although the DOJ will lead the Task Force, the Executive Order directs him to include several other federal agencies, including the CFPB.  Acting Director Mulvaney, who joined Deputy AG Rod Rosenstein in the formal announcement of the Task Force, stated that  “[i]nteragency cooperation is incredibly important to these complex issues” and favorably cited the “growing cooperation” among the DOJ and other federal and state agencies.

The Task Force’s focus on consumer fraud is consistent with Acting Director Mulvaney’s statements that the CFPB will no longer use its enforcement authority to “push the envelope” and instead will use it to target violations that present “quantifiable and unavoidable harm to the consumer.”  It is also consistent with his previous statements identifying the prevention of elder financial abuse as a priority issue for the CFPB.  In his remarks at the formal announcement of the Task Force, Acting Director Mulvaney highlighted the CFPB’s initiatives to address elder financial exploitation.

The California Department of Business Oversight (DBO) has published a second round of modifications to its proposed regulations under the State’s Student Loan Servicing Act.  As previously covered, the DBO published its first round of revised rules last month.

The latest revisions to the regulations clarify servicer responsibilities related to application of payments, borrower communications and handling of qualified written requests (QWRs), and recordkeeping requirements, among other miscellaneous changes.

Payments

The initial regulations provided that a servicer must credit any online payment the same day it is paid by the borrower, if paid before the daily cut off time for same day crediting posted on the servicer’s website, or the next day, if paid after the posted cut off time.  These requirements, which were unmodified by the first round of revisions, have now been changed to clarify that servicers must only apply payments the same or next business day, depending on whether received before or after the published cut off time.

Borrower Communications and Qualified Written Requests

The Act requires that a servicer respond to QWRs by acknowledging receipt of the request within five business days and, within 30 days, providing information relating to the request and an explanation of any account action, if applicable.  The first round of revised regulations added the limitation that a servicer is only required to send a borrower a total of three notices for duplicative requests.  The latest revisions add two additional provisions.  First, servicers are only required to send an acknowledgement of receipt within five days if the action requested by the borrower has not been taken within five days of receipt.  Second, servicers may designate a specific electronic or physical address to which QWRs must be sent.  If designated, however, this information must be posted on the servicer’s website.

The revised regulations also further specify what is required of customer service representatives.  Now, federal and private loan servicer representatives must inform callers about alternative repayment plans if the caller inquires about repayment options.  Federal loan servicers must now also inform callers about loan forgiveness benefits, if the caller inquires about repayment options.  These regulations have evolved significantly.  The initial regulations required that representatives “be capable of discussing” alternative repayment plan and loan forgiveness benefits with callers, and be trained in the difference between forbearance and alternative repayment plans.  The latest revisions have added specific triggers for discussing repayment options—and forgiveness benefits for federal loans.

Servicer Records

The first round of revisions eliminated the DBO’s specific record keeping formatting requirements.  In its place, the latest round of revisions has added the general requirement that the books and records required by the act must be maintained in accordance with generally accepted accounting principles.  The new revisions also change the information required as part of the aggregate student loan servicing report to require the number of monthly payments required to repay the loan.

The modifications are subject to comment until July 25, 2018.  As with the first round, the revisions will not be effective until approved by the Office of Administrative Law and filed with the Secretary of State.

The New York Department of Financial Services (NYDFS) has issued an Online Lending Report that calls for the application of New York usury limits to all online lending and increased regulation of online lenders making loans to New York consumers and small businesses.

On August 22, 2018, from 12:00 p.m. to 1:00 p.m. ET, Ballard Spahr attorneys will hold a webinar to discuss the report.  Click here to register.

A bill signed by New York Governor Cuomo required the NYDFS to study online lending in New York and issue a public report of its findings and recommendations by July 1, 2018. The report indicates that to gather data, the NYDFS asked 48 businesses believed to be engaged in online lending activities in New York to complete a “New York Marketplace Lending Survey.” The NYDFS received responses from 35 of those 48 businesses.  According to the report, the respondents varied in size “from small to some of the largest online lenders in the industry,” and of the 35 respondents, 28 were not currently licensed by the NYDFS and 7 were licensed by the NYDFS.

The report includes a background discussion of the NYDFS’s  supervisory authority and New York usury limits, payday lending, “lessons from the financial crisis,” “New York’s leadership in consumer protection,” and consumer litigation financing.  It also sets forth the survey results, which cover consumer and business loans and consist of statistical and other information about (1) customer and loan numbers, (2) duration of loans, (3) loan sizes, (4) APRs, (5) fees, costs, expenses, and other charges, (6) loan delinquencies (past due 30 days or more), (7) business models, (8) marketing and advertising, (9) credit assessment/underwriting, and (10) complaints and investigations.

The NYDFS had listed topics to be addressed in the report on its website and solicited public comments on such topics.  In the report, the NYDFS also summarizes the 12 comments it received in response to that solicitation.  The NYDFS describes the commenters as “technology and lending associations, chambers of commerce, business associations, and banking, mortgage and credit union associations.”

The report concludes with a discussion of the benefits and risks associated with the lending activities and practices of online lenders based on the survey results followed by the NYDFS’s conclusions and recommendations.  Most of these recommendations will require legislation.

Key items in the report consist of the following:

  • Application of consumer protection laws to small business loans.  The NYDFS recommends that New York consumer protection laws and regulations “should apply equally to all consumer lending and small business lending activities.” According to the NYDFS, such protections include laws and regulations relating to transparency in pricing, fair lending, fair debt collection practices, and data protection.  The NYDFS further states that its “equal application” recommendation “includes robust consumer disclosures; the use of technology easily permits transparency, including disclosures of the full cost of a loan to a borrower and providing the consumer with full understanding of the long-term consequences of accepting short-term relief for a financial need.”  The NYDFS acknowledges that under existing federal law, small business loans are generally exempt from coverage.  To our knowledge, no state has ever subjected small business loans to the same regulations as consumer loans.  The report is devoid of any empirical data supporting this extreme recommendation.  The report does not even mention, let alone address, the risk that subjecting small business loans to the same state statutes that apply to consumer loans may lead to a reduction in the availability of small business loans and an increase in pricing for such loans. The NYDFS does not even define what would be considered a “small business loan.”
  • Application of New York usury laws to all online lending.  The NYDFS recommends the application of New York usury law “to all lending in New York.”   According to the NYDFS, “a loan is a loan from a borrower’s perspective, and  the borrower deserves to get the benefit of New York’s protections, whether the borrower borrows from a bank or credit union or from an online lender.”  While the report acknowledges that out-of-state banks are exporting their interest rates into New York, the report cavalierly suggests that, contrary to well-established U.S. Supreme Court precedent, New York can nevertheless apply its usury limits to such loans.  The recommendation follows earlier discussions in the report in which (1) the NYDFS observes that “a number of online lenders” have partnered “with federally chartered banks, or FDIC-insured banks located  in jurisdictions that do not have interest rate protections on par with New York’s” to expand their consumer lending “through their online platforms without regard to the type of loan offered, the size of the loans or the interest rates charged,” (2) the NYDFS expresses its support for the use of the “true lender theory” to challenge claims by such online lenders that loans they have made in partnership with banks are not subject to New York usury law, and (3) the NYDFS describes the Second Circuit’s holding in Madden v. Midland Funding that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge, but makes no mention of the fact that the OCC believes Madden was wrongly decided.

Thus, in recommending that “all lending in New York” be subject to New York usury laws, the NYDFS appears to be taking the position that no online lender partnering with a bank can permissibly rely on the bank’s federal law power to export interest rates to charge the interest the bank is permitted to charge on loans the bank has assigned to the online lender when such interest exceeds New York usury limits. The NYDFS also notes its opposition to H.R. 4439, the “Modernizing Credit Opportunities Act,” which is intended to address the uncertainty created by “true lender” challenges.  (A group of 21 state attorneys general recently sent a letter to the Senate majority and minority leaders as well as to the chairman and ranking member of the Senate Banking Committee urging them to reject H.R. 4439 and H.R. 3299, the “Protecting Consumers’ Access to Credit Act of 2017,” a bill often referred to as the “Madden fix” bill.)

The NYDFS also appears to be willing to ignore the comments it discusses in the report highlighting the importance of the access to credit that online lending provides to consumers and small businesses.  The NYDFS’s recommendation is likely to further reduce credit availability for New York consumers and small businesses.  Indeed, a recent study showed that credit availability contracted sharply in Connecticut, Vermont, and New York after Madden was decided. See Colleen Honigsberg, Robert J. Jackson, Jr., and Richard Squire, “The Effects of Usury Laws on Higher-Risk Borrowers,” Columbia Business School Research Paper No. 16-38 (May 13, 2016).

  • Expansion of licensing and supervision.  New York law currently requires a nonbank lender to obtain a “Licensed Lender” license if it makes consumer purpose loans of $25,000 or less or business purpose loans of $50,000 or less and the interest rate is greater than 16% (New York’s civil usury limit). The NYDFS comments in the report that “given the low level of national interest rates in recent years, certain online lenders have been able to offer profitable rates under New York’s usury limit such that they would not be required to be licensed and overseen by the Department.”  The NYDFS expresses its continued support for legislation that would “reduce the interest rate above which a non-depository lender is required to be licensed to 7 percent per annum from 16 percent per annum.”
  • Scrutiny of consumer litigation financing.  The NYDFS “notes the growth of consumer litigation financing” and expresses concern “about the amounts that consumers are required to provide to financing companies, which can be a significant portion of the total recoveries from their lawsuits that would be usurious if lending rules were to apply.”  It also expresses concern “about the information many companies provide to consumers about the transactions and the manner in which they provide that information.”  The NYDFS calls for further study of these issues and  expresses its belief that “legislation could provide important safeguards for consumer that do not currently exist.”  The NYDFS does not provide a scintilla of empirical data for its apparent conclusion that legislation containing consumer safeguards is necessary.  It should be noted that the discussion of litigation financing consists of just one paragraph of a 31-page report.

 

In response to the U.S. Supreme Court’s decision in Lucia v. SEC, President Trump has issued an executive order that changes the process used by federal agencies for administrative law judges (ALJs).

In Lucia, the Supreme Court ruled that administrative law judges (ALJs) used by the SEC are “Officers of the United States” under the Appointments Clause in Article II of the U.S. Constitution because they exercise “significant authority pursuant to the laws of the United States.”  Under the Appointments Clause, the power to appoint “Officers” is vested exclusively in the President, a court of law, or the head of a “Department.”

Currently, federal agencies hire ALJs through a competitive merit-selection process administered by the Office of Personnel Management (OPM).  The Executive Order removes ALJs from the “competitive service,” a federal worker classification that follows the OPM’s hiring rules, and places them into the “excepted service,” a category of federal workers who are subject to a different hiring process, by creating a new excepted service category specifically for ALJs.

Federal regulations provide that appointments of workers who are in the excepted service are to be made “in accordance with such regulations and practices as the head of the agency concerned finds necessary.”  The executive order amends such regulations to provide that for ALJs, such regulations and practices must include the requirement that an ALJ who is other than an incumbent ALJ must be licensed to practice law by a state, the District of Columbia, the Commonwealth of Puerto Rico, or any territorial court established under the U.S. Constitution.

Presumably, to address Lucia’s conclusion that ALJs must be appointed by an agency official who qualifies as the “head of a Department” for purposes of the Appointments Clause, the agency regulations for hiring ALJs issued pursuant to the executive order will provide that a final hiring decision must be made by the agency head rather than a subordinate official.  However, even if ALJs are only hired by agency heads, it is not certain that the heads of all agencies would qualify as the “head of a Department.”

As we have previously observed with regard to the CFPB, the Dodd-Frank Act provided that “[t]here is established in the Federal Reserve System, an independent bureau to be known as the “[BCFP].”  Under U.S. Supreme Court decisions that have addressed the meaning of the term “Department,” it is unclear whether an establishment’s status as an independent agency with a principal officer who is not subordinate to any other executive officer is sufficient to render it a “Department” or whether it must also be self-contained.  While compelling arguments can be made that that the CFPB’s status as an independent agency should be sufficient to render it a “Department,” Congress’ decision to house the CFPB in the Federal Reserve means that the CFPB’s status as a “Department” is not free from doubt.  Similarly, because the OCC is housed in the Treasury Department, there is a question whether the Comptroller would qualify as the “head of a Department.”

 

As we discuss below, President Trump’s nomination of D.C. Circuit Judge Brett Kavanaugh to serve as a Justice of the U.S. Supreme Court could have significant implications for all federal agencies should Judge Kavanaugh be confirmed.  However, in light of Judge Kavanaugh’s rulings in the PHH case, the implications for the CFPB could be even more consequential.

Judge Kavanaugh was a member of the 3-judge D.C. Circuit panel and the author of the panel’s decision in PHH which held that the CFPB’s single-director-removable-only-for-cause structure violates Article II of the U.S. Constitution.  He also took the same position in his dissent from the en banc majority decision in PHH which held that the structure is constitutional.  In both the panel decision and his dissent from the en banc decision, Judge Kavanaugh concluded that the proper remedy was to sever the for-cause removal provision from the Dodd-Frank Act and thereby allow the CFPB to continue to operate with a Director removable by the President at will (rather than strike Title X of Dodd-Frank in its entirety).

While there is no possibility of PHH reaching the Supreme Court (none of the parties sought certiorari and the CFPB dismissed its administrative proceeding against PHH), there are several other pending cases involving a challenge to the CFPB’s constitutionality that could reach the Supreme Court in the coming years.  Those cases include All American Check Cashing’s interlocutory appeal to the U.S. Court of Appeals for the Fifth Circuit of the district court’s ruling upholding the CFPB’s constitutionality which is currently being briefed and a possible appeal to the Second Circuit in the RD Legal Funding case of the district court’s ruling holding that the CFPB’s structure is unconstitutional.

Should Judge Kavanaugh have an opportunity to rule on the question of the CFPB’s constitutionality as a member of the Supreme Court, we would expect him to be a definite vote in favor of a decision that holds that the CFPB’s structure is unconstitutional and severs the for-cause removal provision instead of striking all of Title X.  (Of course, there is also the possibility that this question could become moot if Congress were to change the for-cause removal provision or change the CFPB’s leadership structure to a multi-member commission.)  For that reason, we would also expect Judge Kavanaugh to face a request for him to recuse himself from the litigants who are defending the CFPB’s constitutionality.

In making such a request, the litigants are likely to rely on 28 U.S.C. Section 455 which provides:

(a) Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.

(b)  He shall also disqualify himself in the following circumstances:

[(1)-(2) omitted]

(3)   Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy;

[(4)-(5) omitted].

The litigants seeking Judge Kavanaugh’s recusal might argue that based on his PHH opinions, he is a “justice” who “has served in governmental employment and in such capacity…expressed an opinion concerning the merits of the particular case in controversy.”

While the phrase “particular case in controversy” arguably is limited to the specific case in which the Justice previously issued an opinion (i.e. PHH), a broader reading is suggested by a memorandum written by Justice Scalia regarding his decision not to recuse himself from a case in which Vice President Cheney was a named party.  That case involved a claim that a government committee had not complied with the Federal Advisory Committee Act (FACA).  According to Justice Scalia, Vice President Cheney’s name appeared in the lawsuit “only because he was the head of [that] Government committee.”

In explaining his decision not to recuse himself, Justice Scalia indicated that his personal friendship with Vice President Cheney did not call his impartiality into question under Section 455(a).  He stated that “while friendship is a ground for recusal of a Justice where the personal fortune or the personal freedom of the friend is at issue, it has traditionally not been a ground for recusal where official action is at issue, no matter how important the official action was to the ambitions or the reputation of the Government officer.”

However, in a footnote, Justice Scalia noted that the public interest group that was seeking his recusal had cited to the Supreme Court’s decision in Public Citizen v. Department of Justice, 491 U. S. 440 (1989), as a prior case in which Justice Scalia had recused himself.  Justice Scalia commented that while that case also involved FACA, as Assistant Attorney General for the Office of Legal Counsel, he had provided an opinion “that addressed the precise question presented in Public Citizen: whether the American Bar Association’s Standing Committee on Federal Judiciary, which provided advice to the President concerning judicial nominees, could be regulated as an ‘advisory committee’ under FACA.”  Judge Scalia stated that he “concluded that [his] withdrawal from the case was required by 28 U. S. C. §455(b)(3), which mandates recusal where the judge ‘has served in governmental employment and in such capacity . . . expressed an opinion concerning the merits of the particular case in controversy.’”  He further stated that, in contrast, “I have never expressed an opinion concerning the merits of the present case.”

Even if the phrase “the merits of the particular case in controversy” is read broadly, it seems doubtful that Section 455 was intended to apply where the prior opinion in question is one that a Justice whose recusal is sought issued as an appellate judge.  A separate provision, 28 U.S.C. Section 47, bars a judge from hearing an appeal in a case only where he or she was the trial judge.  There is no similar express prohibition on a Supreme Court Justice hearing an appeal in a case where he or she was an appellate judge.  It also bears noting that the circumstances involved in Justice Scalia’s recusal from Public Citizen are distinguishable from those that would be presented by Judge Kavanaugh’s recusal in that Justice Scalia had previously expressed his views on FACA in his capacity as a government attorney and not as a judge.  In any event, there is no mechanism for enforcing a Supreme Court Justice’s compliance with 28 U. S. C. Section 455 and Supreme Court Justices do not feel bound by the restrictions that apply to other members of the federal judiciary.

Based on the panel decision in PHH, it appears that Judge Kavanaugh would likely take an unfavorable view of aggressive actions and positions of any federal agency that are not clearly consistent with the agency’s statutory authority.  In the panel decision, Judge Kavanaugh refused to give Chevron deference to the CFPB’s interpretation of RESPA, observing that the statutory language “specifically bars the aggressive interpretation of [RESPA’s referral fee prohibition] advanced by the CFPB in this case.”

The panel decision in PHH also found that the CFPB’s retroactive application of its RESPA interpretation violated the Due Process Clause.  This suggests that Judge Kavanaugh could be favorably disposed to other due process challenges to agency actions or positions.

The New York City Department of Consumer Affairs (DCA) has adopted new rules for used car dealers, requiring all licensed dealers to make additional disclosures to consumers and creating a new consumer bill of rights for the industry. The new rules went into effect on June 24, 2018.

Under the new rules, dealers must provide a financing statement in a prescribed form prior to the execution of any retail installment contract (RIC).  The form includes “sale terms,” “financing terms,” and pricing information for any add-on products or services. The financing terms must include two annual percentage rates: the contract APR (which presumably is the APR for the financing that the buyer will actually be receiving and will be the APR that is disclosed in the TILA disclosures that are part of the buyer’s RIC) and the “lowest APR offered to buyer by any finance company with the same term, number of payments, collateral, and down payment” (which presumably is intended to reveal to the buyer if the dealer could have obtained comparable financing for the buyer at a lower APR).

Consumers must also be given an automobile contract cancellation option form that offers a consumer a two-weekday cancellation period. A consumer may use this form to cancel the purchase and receive a full refund.

Finally, the new rules create a “Used Car Consumer Bill of Rights,” a copy of which must be provided to each consumer and posted conspicuously anywhere contracts are negotiated or executed. The posting should be made in English and any other language in which the dealer does business, so long as the DCA has issued a version of the bill of rights in that other language.

Three more amicus briefs have been filed in support of All American Check Cashing and the other appellants in their interlocutory appeal to the U.S. Court of Appeals for the Fifth Circuit of the district court’s ruling upholding the CFPB’s constitutionality.

The amicus briefs were filed by the following amici:

  • Pacific Legal Foundation, which describes itself as “the most experienced public-interest legal organization defending the constitutional principle of separation of powers in the arena of administrative law.”
  • The Attorneys General of Texas, Arkansas, Georgia, Indiana, Kansas, Louisiana, Michigan, Nebraska, Oklahoma, South Carolina, Tennessee, Utah, and West Virginia, and the Governor of Maine.
  • U.S. Chamber of Commerce

An amicus brief in support of the appellants was previously filed by a group of six “separation of powers scholars.”