Auto Finance

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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

On September 28, 2022, the Department of Justice (”DOJ”) announced a settlement with Westlake Financial Services (“Westlake”), a Los Angeles-based indirect auto finance company specializing in subprime and near-subprime loans, resolving allegations that Westlake failed to fully provide interest rate benefits to eligible servicemembers as required under the Servicemembers Civil Relief Act (“SCRA”). … Continue Reading

In a blog post on Monday, the CFPB advised that it is concerned about the impact of rising car prices on consumer’s financial health, particularly consumers with sub-prime or near prime credit scores.  The most recent Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York concluded that the total dollar value of outstanding auto loans rose to $1.5 trillion last quarter, an increase of $33 billion from Q1 to Q2 this year. … Continue Reading

Expressing a range of concerns, several key industry groups submitted comments to the Federal Trade Commission (“FTC”) last week regarding its proposed rule that would impose new substantive and disclosure obligations on auto-dealers in the auto finance process.  The public comment period for the notice of proposed rulemaking (“NPRM”) regarding the Motor Vehicle Dealers Trade Regulation Rule (the “Rule”) closed on September 15, 2022 after the FTC declined in August to extend it. … Continue Reading

The FTC has declined requests to extend the comment period for its proposed rule that would impose a number of new substantive and disclosure requirements on motor vehicle dealers in connection with the car buying or leasing process. 

The FTC’s notice of proposed rulemaking (NPRM) was published in the Federal Register on July 13, 2022 with a 60-day comment period that ends on September 12, 2022. … Continue Reading

The FTC’s proposal would impose a number of new substantive and disclosure requirements on motor vehicle dealers in connection with the car buying or leasing process.  The topics we cover include: the FTC’s statutory authority for the proposal and the proposal’s coverage (including buy-here-pay-here dealers); the specific new requirements the proposal would impose; how the proposal interacts with existing federal and state laws; the proposal’s impact on auto finance companies; potential remedies for violations; and timing of next rulemaking steps.… Continue Reading

On July 29, 2022, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) issued a notification letter (the “joint letter”) to “remind” auto lenders and leasing companies of the protections provided to servicemembers and their dependents under the Servicemembers Civil Relief Act (SCRA).  The joint letter provides a very basic overview and reminder of the vehicle repossession protections, early vehicle lease termination rights, and interest rate cap available to eligible servicemembers under the SCRA.… Continue Reading

The CFPB announced last week that it has entered into a settlement with Hyundai Capital America (Hyundai) to resolve alleged violations of the Fair Credit Reporting Act and Regulation V arising from Hyundai’s reporting of information on vehicle retail installment contracts and leases to consumer reporting agencies (CRAs) from 2016 to 2020. … Continue Reading

The Federal Trade Commission (FTC) recently proposed a rule that would impose a number of new substantive and disclosure requirements on auto-dealers in the car-buying process.  The FTC described the proposed Rule as one designed “to ban junk fees and bait-and-switch advertising tactics that can plague consumers throughout the car-buying experience.” … Continue Reading