Automotive Finance: The Regulatory Cup Spilleth Over

Abstract

Almost every aspect of the life cycle of retail contract and lease transactions, from marketing and account originations to servicing and collections, has received heightened regulatory attention during the past year (2015), since our previous Survey. This Survey highlights the most significant developments since the spring of 2015, including the Bureau of Consumer Financial Protection’s (“CFPB”) enactment of a larger market participant rule and the expansion of its Examination Procedures for automobile finance lenders. On the fair lending front, this Survey addresses consent orders entered by the U.S. Department of Justice (“DOJ”) with American Honda Finance Corporation (“AHFC”) and Evergreen Bank Group (“Evergreen”); the CFPB’s white paper on the proxy methodology it uses in fair lending cases; and its announcement that consumers subject to alleged credit discrimination by Ally Financial, Inc. and Ally Bank (“Ally”) will be receiving instructions on how to apply for restitution. On the servicing front, this Survey examines enforcement actions by the CFPB against First Investors Financial Services Group, Inc. (“First Investors”) in connection with credit reporting activities and Security National Automotive Acceptances Company (“SNAAC”) related to collection activities involving servicemembers. This survey also reports on the New York Attorney General’s enforcement actions against vehicle dealers’ with regard to their sale and financing of ancillary products.

Keywords: consumer financial services law, consumer protection law, fair lending, servicemember protection law, collections law, Consumer Financial Protection Bureau, New York Attorney General

JEL Classification: D18, J71, K20, K23, L62