F&I and Showroom, August 2015

Compliance 30 F I and Showroom August 2015 complaints Mayor de Blasio said Why Because in too many cases theres been deceptive advertising high pressure sales tactics undisclosed fees and add ons that raise the listed price In the future as a result of this legislation the price tag will include all fees he added This bill will protect consumers by ensuring transparency in the citys used car industry The new mandate was to take effect within 120 days of its signing Legislation like this is very difficult obviously because there are hundreds and hundreds of products that are out there GNYADAs Schienberg says They originally wanted it on the windshield of the car And I said They dont make a windshield that big Fair Warning F I product pricing isnt just the concern of municipal and state regulators Also in May U S Bank informed its dealer partners that it would begin monitoring unexplained differences in pricing or excessive add on product financing due to the regulatory actions in the auto lending market by the Consumer Financial Protection Bureau CFPB As the CFPB finalized a rule in June giving it authority over nonbank auto finance companies that make acquire or refinance 10000 or more loans or leases annually it also added new examination procedures for auto finance to its Supervision and Examination Manual The procedures included a section on ancillary products establishing that GAP insurance vehicle service contracts and add ons are subject to review by CFPB examiners The manual also lists biweekly payment plans payment protection credit protection and extended warranties as risks to consumers It asks examiners to determine whether the servicer they are examining offers or finances those products suggesting that lenders who provide financing could be on the hook not just product providers The CFPBs oversight may make the margins on F I products much much thinner or maybe products will go away but then somethings got to give Bellavia says And that just means the gross profit on the front end of cars will be much higher And that hurts dealers It hurts manufacturers because manufacturers dont like dealers making big grosses on the front end of cars And ultimately it hurts consumers The CFPB does not have regulatory authority over dealers but industry stakeholders such as the National Automobile Dealers Association NADA believe the bureau is using its oversight of auto lenders to turn the screws on dealerships On July 27 the bureau rejected the NADAs Freedom of Information Act request for an internal CFPB memo The memo supposedly proved that the CFPBs goal in the indirect auto financing channel was to limit dealers ability to mark up interest rates as compensation for arranging financing which goes against the bureaus Congressional mandate not to regulate dealers The CFPB appears to be way outside the swim lane Congress authorized it to swim in NADA President Peter Welch said of the memo No Defense But discrepancy in F I product pricing was not among the risks listed in the CFPBs latest auto finance examination procedures Instead the focus was largely on whether consumers provided written confirmation that they opted for products and knew those products were optional Both of those issues came into play in Schneidermans settlements with dealers who sold CFI products Generation Kia for instance paid 16000 to reimburse 24 consumers who purchased CFI contracts but the majority of the fines the dealership paid were related to the attorney generals allegations that the operation jammed the products into customer deals The AG was targeting the product without regard to jamming or payment packing claims Bellavia argues The AG is only looking at other potential violations to force dealers into a costly settlement to generate a favorable press release But even if the other 20 or so dealerships made the proper disclosures Schienberg says theyll still be on the hook for selling a product the state deems illegal Ignorance is no defense he says especially with this attorney general in New York State In June the Consumer Financial Protection Bureau added new procedures for auto finance to its Supervision and Examination Manual including a section on F I products