Auto Finance

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On June 21, 2023, the American Financial Services Association (“AFSA”) asked the House Appropriations Committee to include language in the Financial Services and General Government appropriations bill that would prevent the Federal Trade Commission (“FTC”) from finalizing or implementing the Motor Vehicle Dealers Trade Regulation Rule (the “Proposed Rule”).

In a letter to Representative Steve Womack, the Chairman of the Subcommittee on Financial Services and General Government, AFSA criticized the Proposed Rule as a limitation on consumers’ ability to purchase voluntary protection products, such as service contracts, guaranteed asset protection (“GAP”) coverage, tire and wheel protection, and other products that protect vehicles. … Continue Reading

On May 31, 2023, the Federal Trade Commission (“FTC”) requested public comment on a petition for rulemaking it received from six national consumer advocate groups regarding “yo-yo sales,” a term the groups use to refer to motor vehicle sale transactions where credit terms or other deal terms are changed post-purchase and delivery of the vehicle because of a financing contingency. … Continue Reading

On February 23, 2023, the CFPB announced in a blog post that it had issued orders to nine large auto lenders requesting information about their auto lending portfolios.  The orders, which the CFPB says were sent to a cross-section of the auto finance market, represent the latest action taken by the Bureau in its effort to build a new data set that gives better insight into market trends. … Continue Reading

On January 31, 2023, the Massachusetts Attorney General’s Office (“Mass AG”) announced a settlement with Hometown Auto Framingham, Inc. (“Hometown Auto”), resolving allegations that the auto dealership had engaged in unfair, deceptive, and discriminatory pricing of add-on products sold to Black and Hispanic consumers.  Under the terms of the settlement, Hometown Auto will pay $350,000, which includes $200,000 in restitution and a $150,000 civil penalty.… Continue Reading

On January 4, 2023, Colorado Attorney General Phil Weiser announced settlements with two state-chartered credit unions, Bellco Credit Union (“Bellco”) and Canvas Credit Union (“Canvas”), over Guaranteed Automobile Protection (commonly referred to as Guaranteed Asset Protection, or “GAP”) refunds.  An investigation conducted by the Consumer Protection Section of the Colorado Department of Law found that the credit unions were not refunding GAP fees owed to consumers under state law. … Continue Reading

The FTC’s proposal would impose a number of new substantive and disclosure requirements on auto dealers in connection with the car buying or leasing process.  We first discuss NADA’s comment letter to the FTC on the proposal, including NADA’s concerns with the process used by the FTC to issue the proposal and with the proposal’s disclosure, recordkeeping, website posting, and other requirements. … Continue Reading

On November 17, 2022, the Consumer Financial Protection Bureau (“CFPB”) announced in a blog post that it is in seeking to build a new data set that “will allow for a more robust understanding of market trends” in the auto market.  According to the CFPB, over 100 million Americans have an auto loan, and auto loan balances (currently estimated at $1.5 trillion nationally) are on pace to surpass student loans as the second-largest debt category in 2023. … Continue Reading

Two recently-passed bills in California, Assembly Bill 2311 (“AB 2311”) and Senate Bill 1311 (”SB 1311”), were signed into law by Governor Gavin Newsom on September 13 and September 27, respectively, placing new restrictions on the sale of Guaranteed Asset Protection (“GAP”) waivers in California.  The new laws limit the price of GAP waivers, add new disclosure requirements, ban GAP waiver sales in certain instances, and prohibit financing of GAP insurance in auto loans to servicemembers.… Continue Reading

On October 18, 2022, the Federal Trade Commission (“FTC”) announced a settlement with a Washington, D.C.-area auto dealer, Passport Automotive Group (“Passport”), resolving allegations that it had deceived consumers by adding illegal “junk” fees onto car prices and charging Black and Latino consumers higher financing costs and fees.  Under the terms of the settlement, Passport will pay more than $3.3 million in consumer redress.… Continue Reading

Following up on a threat it made back in 2018, the New York State Department of Financial Services (DFS) announced on October 6, 2022 that it entered into a consent order with Rhinebeck Bank (“Rhinebeck”) to settle discrimination claims involving discretionary dealer markups on retail installment contracts with minority borrowers.  Under the settlement, Rhinebeck will pay a $950,000 civil money penalty, provide restitution to borrowers, and develop a compliance plan which includes updates to its auto policies to cap dealer markups on installment contracts purchased by the bank.… Continue Reading