Compliance with existing and new laws and regulations may be one of the most important and difficult tasks facing BHPH and all auto dealers today. New regulations are appearing regularly and enforcement of existing regulations continues to expand. Now is definitely not the time to stick your head in the sand and hope these developments will just go away.
You’ve probably seen the news from over the weekend that Governor Brown signed two of the bills passed recently to regulate the BHPH industry and vetoed the third. The two bills signed into law require BHPH dealers to provide a 30-day, 1000 mile warranty on all vehicles financed and to post the Fair Market Value on all vehicles for sale. The vetoed bill would have capped interest rates at 17% plus the federal funds rate and given customers a 15-day grace period on late payments before a dealer could repossess a vehicle. It would also have required BHPH dealers to obtain a finance license. These new laws affect only California but it will be interesting to see if other states look to pass similar restrictions.
The two biggest federal regulators are the Federal Trade Commission and the Consumer Financial Protection Bureau and they seem to be starting a competition to see who can be the biggest and baddest regulator. In testimony before the House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit last month, FTC regulators testified that enforcing the Fair Credit Reporting Act would be a priority of that agency. They have recently fined Spokeo, a data broker, $800,000 and HireRight Solutions, a background screening company, $2.6 million for violations of that act.
Not to be outdone, the CFPB has focused on fraudulent and misleading advertising by credit card providers. Today they announced a fine against 3 American Express affiliates totaling $27.5 million. CFPB’s share of the fine is $14.1 million. This comes on the heels of an announcement last month of a fine of $14 million against Discover (CFPB share – $7 million) and a fine in July against Capital One of $25 million, all of which went to CFPB. CFPB uses their share of the fine money to create a fund to be used for further enforcement actions. That means they now have at least $46 million in their war chest.
While none of these enforcement actions deal specifically with car dealers, you would have to be naïve not to see the writing on the wall. Compliance with the Fair Credit Reporting Act and deceptive or misleading advertising could be applied just as easily to auto dealers as they could to the businesses already fined. While the focus of either agency has not shifted specifically to our industry, it won’t be long before we are in their crosshairs as well.
If you have not taken the time to create written compliance policies and procedures, your time is running out. If you have not given the practices at your dealership a careful study and changed from “the way things have always been done” to what is now required to be compliant with the rules and regulations of today, you could face serious consequences or even the loss of your business.
Don’t Delay – Get Compliant Today!!!