F&I and Showroom, August 2015

Compliance 28 F I and Showroom August 2015 dealer group was accused of charging consumers for the credit repair product without their knowledge or consent and failing to disclose the price of the product The operation was also charged with failing to properly describe the nature of the services being purchased But Bellavia isnt convinced dealers offering CFIs services should shoulder the majority of the blame CFI did a hard sell on the dealers suggesting that the product was perfectly valid and legitimate and in compliance Bellavia says It was not Frequently Worthless Compared to Paragons six figure settlement and an additional payment of 325000 in penalties fees and costs to the state the fines levied against CFI seem somewhat trivial The product provider was shut down in March after entering into a consent order with the attorney general It was also ordered to pay 50000 But another 2 million in fines were suspended subject to CFIs compliance with the requirements set forth in the consent order which included dissolving the company and notifying dealers with which it had contracts The provider told Schneidermans office that it sold its services to 37000 customers in New York and other states But the regulator called these services frequently worthless at best providing a small portion of promised credit remedies like fixing errors on credit reports and mediating collections and past due accounts In fact the AG alleged that 75 to 80 of CFI customers received no services at all A lot of consumers were unaware they were even being deceived by CFI says a spokesperson for the attorney general After an initial tipoff we received from a complaint we helped to uncover a lot of this fraud which many did not know was occurring But as Schneiderman sets his sights on the dealers that sold CFI contracts his office has announced it intends to file lawsuits against 11 more dealerships CFIs cofounder Damien Bullard is still at the helm of training and F I product provider IDDS Group And in the same month Paragon settled with the attorney general IDDS was pitching a program to certify finance managers Whats crazy about this business is if you start at a dealership today as a finance manager you are conducting finance that day Bullard told F I and Showroom two weeks before the Paragon settlement was announced You are hanging paper that day you are seeing customers that day And theres no guidelines or really standardized practices that you have to follow Among other violations CFI failed to adhere to the states prohibition on collecting upfront fees for credit repair services The attorney general also alleged that CFI instructed its staff to tell customers its services were included in the price of the car and to refer them back to the dealership Bullard declined to comment on any of the companys activities I would say that its going to be very hard for new car dealers to continue to sell credit repair products in New York says Mark Schienberg president of the Greater New York Automobile Dealers Association GNYADA Youve got to pay attention to how they are structured Pricing Problem Paragon wasnt the only dealership meriting Schneidermans attention in June The attorney generals office filed a motion on June 9 to compel Staten Island based Manfredi Auto Group to comply with an investigatory subpoena it had issued three months earlier Between its 14 stores Manfredi sold 1475 CFI contracts to car buyers from 2009 to 2014 generating 445667 in total revenue The regulators office declined to comment on its ongoing investigation of the group Unlike Paragon which charged consumers on average 1495 for a CFI product Manfredi sold the companys credit repair services for 302 a pop Its discrepancies like this that have regulators up in arms In fact New York City Mayor Bill de Blasio signed into law on May 18 an amendment to the citys administrative code that requires used car dealers to display not only the total selling price of a car but the total selling price of any add on product offered for sale The signage must also advise buyers that any F I product they are offered is optional The used car industry frequently incurs a high number of consumer Attorney General Eric Schneiderman settled with Paragon Motors for 135 million in June The dealer group was charged with selling an illegal credit repair product to 15000 consumers