F&I and Showroom, October 2016

www fi magazine com 8 F I and Showroom October 2016 DEVELOPMENTS Last month the House Financial Services Committee approved a bill described by supporters as an alternative to the Dodd Frank Act Critics however called the bill an anthology of the committees efforts over the past six years to defang the Consumer Financial Protection Bureau CFPB and deregulate the financial services industry House bill 5983 also known as the Financial CHOICE Act of 2016 was introduced on Sept 9 by Rep Jeb Hensarling R Texas one of the CFPBs harshest critics It was passed by the committee he chairs on Sept 13 by a 30 26 vote The legislation contains language found in 73 other bills introduced during the 114th Congress including two bills S 2663 and H R 1737 that aim to repeal the CFPBs March 2013 guidance on dealer participation Simply put the Dodd Frank Act has hurt the economy hurt consumers codified bank bailouts and made our financial system less stable said Hensarling during a hearing on his proposed legislation Theres a better way forward and its called the Financial CHOICE Act Its an acronym for creating hope and opportunity for investors consumers and entrepreneurs According to a press release posted on the House Financial Committees website the legislation would end taxpayer funded bailouts for large financial institutions relieve banks that elect to be strongly capitalized from regulations impose tougher penalties on institutions that commit financial fraud and demand greater accountability from Washington regulators The bill which has been referred to more than a half dozen House committees for consideration also includes provisions that would make the CFPBs budget subject to Congressional appropriations replaces its single director with a five person bipartisan commission and repeals the CFPBs abusive standard and authority to regulate arbitration clauses This is all part of a massive deregulatory agenda not to make America great but to put the needs of special interest above those of working Americans and leave taxpayers footing the bill said Rep Maxine Waters D Calif during the same hearing House Committee Passes Bill Aimed at Replacing Dodd Frank TEXAS DEALERS AGREE TO PAY 85000 FOR DECEPTIVE ADVERTISING Three Dallas area dealerships agreed to pay 85000 to settle charges that they violated a 2014 Federal Trade Commission FTC administrative order that barred them from deceptively advertising the cost of buying or leasing a car According to the FTC New World Auto Imports Inc New World Auto Imports of Rockwall Inc and Hampton Two Auto Corp collectively known as Southwest Kia violated the 2014 order by concealing sales and lease terms that added significant costs or limited who could qualify for vehicles at their advertised prices These ads according to the regulator violated the Truth in Lending Act and the Consumer Leasing Act which requires clear and conspicuous disclosure of credit and lease terms Aside from the 85000 fine the FTCs proposed order bars the dealership from violating both acts The case against Southwest Kia filed Aug 18 2016 in the U S District Court of Texas Dallas Division centered on the groups television ad and mailers The TV ad promoted two cars for less than 200 a month But in fine print that appeared for only two seconds the dealerships disclosed that the offer applied only to leases not sales and required a 1999 payment due at signing Similar disclosure issues were found in the mailers One dealer mailed ads claiming a new car could be purchased for 179 per month but in print too small to read without magnification disclosed that 1999 would be due up front along with tax title and license fees and that 8271 would be due at the end of a 38 month financing term the FTC stated in its press release The ads according to the regulator targeted consumers with major credit problems The dealerships also advertised vehicles for 250 per month However in fine print the dealership disclosed that the offer was based on a 425 annual percentage rate that few if any consumers with such major credit issues could obtain