F&I and Showroom, April 2014

Developments CFPB Questioned About Internal Management Practices AFTER REPORTS SURFACED IN MARCH ABOUT possible racial disparities regarding the Consumer Financial Protection Bureaus internal management practices three Republican members of the U S House of Representatives sent a letter to the CFPB requesting records related to recent employee performance reviews The implications could be troublesome for the agency which asserted last March that rate participation programs auto fi nance sources use to compensate dealers create signifi cant fair lending risks On March 6 Rep Jeb Hensarling R Texas chairman of House Financial Services Committee penned a letter in response to an article published by the American Banker CFPB Staff Evaluations Show Sharp Racial Disparities The letter which was signed by Rep Shelley Moore Capito R W Va and Rep Patrick McHenry RN C requested the CFPB provide documentation no later than March 13 concerning complaints and grievances fi led by bureau employees as well as records related to the distribution of employee performance ratings by demographics and by offi ce and division According to the letter a No FEAR Act disclosure released by the bureau for the period ending Dec 31 2013 showed that several bureau employees fi led formal discrimination claims Additionally the CFPBs 2013 Annual Employee Survey revealed that fewer than half of bureau employees are satisfi ed with the policies and practices of senior leaders that fewer than half of bureau employees agree that promotions and pay raises are based on merit and that fewer than three in fi ve bureau employees understood what they had to do to be rated at different performance levels 8 F I and Showroom April 2014 Dealer Count in Carfax Suit Reaches 530 A s of Feb 25 the number of dealer plaintiffs listed in the federal antitrust lawsuit against Carfax has reached 530 The fi rm of Bellavia Blatt Andron Crossett fi led the lawsuit last April on behalf of 124 dealerships And according to Senior Partner Leonard Bellavia new plaintiffs are being added every day The lawsuit is a result of my receiving numerous complaints from dealers that we represent about their relationship with Carfax Bellavia said And that stems from the fact that dealers seem to be frustrated over the lack of reliability of the Carfax report and how it puts them in a very awkward position with their own customers The lawsuit charges Carfax with impairing competition by entering into agreements with vehicle merchandising sites like Autotrader com and Cars com and with OEMs and their certifi ed pre owned programs then asking them not to recognize vehicle history reports from anyone other than CARFAX The net result is every place the dealer turns he fi nds himself handcuffed into using Carfax Bellavia charged Because Carfax has no competition its reports are substandard its prices are excessive to dealers and it enables them to employ a market strategy that disparages its own customer base In the past dealers have attacked Carfaxs advertising tactics for vilifying them and painting them as untrustworthy Bellavia added that the companys prices are infl ated to nearly fi ve times the fair market value when compared to at least nine other providers of vehicle history reports Competition does two things It keeps prices in check and it requires that your product be state of the art Bellavia said Bellavia said last month the lawsuit should enter the discovery phase within the next three months adding that several preliminary motions in the case were still being resolved CONTINUED ON PAGE 10