Vehicle Loans

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The CFPB has responded to the October 30 letter it received from a bipartisan group of 22 U.S. Senators raising concerns about the fair lending auto finance bulletin issued by the CFPB this past March.  The Senators’ letter posed a series of questions and we expect many of the Senators will find the answers provided by the CFPB in its five-page letter dated November 4 to be less than satisfactory.  … Continue Reading

A  bipartisan group of 22 U.S. Senators –11 Republicans and 11 Democrats–sent a letter to the CFPB yesterday raising concerns about the fair lending auto finance bulletin issued by the CFPB this past March.  In particular, the Senators question the CFPB’s efforts to “eliminate or severely limit” dealer finance charge participation “through a ‘disparate impact’ theory of liability under the Equal Credit Opportunity Act” based on the CFPB’s perception that “permitting negotiation over a consumer’s interest rate” creates a significant risk of discriminatory pricing disparities. … Continue Reading

Democratic Senator Edward Markey wants the FTC to take a more active role in policing auto dealer sales practices.  Because Dodd-Frank bars the CFPB from directly regulating auto dealers, the CFPB has targeted the fair lending practices of banks and non-banks purchasing auto finance consumer contracts from auto dealers.  In a letter sent to the FTC on October 23, Senator Markey called on the FTC to investigate whether auto dealers are using “potentially unfair or deceptive financing practices to sell cars to consumers and then take all appropriate action to address these practices to protect consumers.” … Continue Reading

We have previously blogged about the CFPB’s laser-like focus on the fair lending practices of banks and non-banks purchasing auto finance consumer contracts from auto dealers. See here, here, here, here, and here.

In many of our posts, we have been very critical of the Bureau’s deployment of the disparate impact theory for identifying violations of the Equal Credit Opportunity Act.… Continue Reading

I want to thank Jeff Sovern over at the Public Citizen Consumer Law & Policy Blog for having an interesting back-and-forth with me over the last week about the application of the disparate impact theory of liability to dealer finance charge participation in the auto sales finance context.  We’ve been debating whether the CFPB’s announced intention to bring enforcement actions against auto sales finance companies will cause consumer prices for auto financing to increase. … Continue Reading

Ever since the CFPB’s release of its bulletin relating to disparate impact analysis of dealer rate participation last week, the press and consumer advocacy groups have been buzzing about the Bureau’s stance and its potential impact on the industry and consumers.  Alan Kaplinsky and I previously blogged about the bulletin and its associated issues here, here and here. … Continue Reading

It seems two major auto dealer trade groups share my doubts about whether the CFPB’s position on dealer rate participation will really help car buyers.  In a statement responding to CFPB Bulletin 2013-02,  the National Automobile Dealers Association and the National Association of Minority Automobile Dealers assert that the CFPB guidance “attempts to force auto finance sources into changing the way they compensate dealers without any indication that the Bureau has examined the effect this change could have on the cost of credit for consumers.” … Continue Reading

My colleague, Chris Willis, posted his reaction to CFPB Bulletin 2013-02, which provides guidance as to how the CFPB will apply ECOA and Reg B to dealer rate participation in the auto finance business. Except for Chris’ concern that the CFPB might be saying that disparate impact alone is sufficient to violate ECOA and Reg B without applying the three-part test set forth in Reg B which enables the auto finance company to argue a business justification for the practice, the guidance does not really change the CFPB’s already well-articulated position on this issue.… Continue Reading

Earlier today, the CFPB released its guidance bulletin with respect to automobile indirect finance fair lending issues.  The bulletin’s intent is unmistakably clear from the accompanying press release’s tag line: “CONSUMER FINANCIAL PROTECTION BUREAU TO HOLD AUTO LENDERS ACCOUNTABLE FOR ILLEGAL DISCRIMINATORY MARKUP.”  The bulletin is, in my view, a prelude to the fair lending enforcement actions that the CFPB intends to take against indirect auto finance companies later this year. … Continue Reading