Tag Archive | "compliance"

Appeals Court Rules CFPB Structure Is Constitutional


WASHINGTON, D.C. — Nineteen days after the deputy director of the Consumer Financial Protection Bureau kicked off the next phase in her battle for control of the bureau, a federal appeals court upheld the constitutionality of the CFPB’s structure.

On Jan. 31, the D.C. Court of Appeals ruled 7-3 that a provision in the Dodd-Frank Act that says the CFPB director can only be removed for cause does not unconstitutionally constrain the president. The court also noted in its ruling, written by Judge Cornelia Pillard, that the way the CFPB is funded “fits within the tradition of independent financial regulators.”

“Applying binding Supreme Court precedent, we see no constitutional defect in the statute preventing the president from firing the CFPB director without cause. We thus uphold Congress’ choice,” Pillard wrote, adding that “no relevant consideration gives us reason to doubt the constitutionality of the independent CFPB’s single-member structure.”

The decision reverses the court’s October 2016 decision that declared the CFPB’s leadership unconstitutional by a 2-1 ruling and vacated a $103 million fine the bureau levied against New Jersey-based PHH Corp. in 2015 for allegedly accepting kickbacks from mortgage insurers.

The court did reject the bureau’s penalty against PHH in its ruling.

That same court will now hear CFPB Deputy Director Leandra English’s appeal of last month’s ruling by U.S. District Timothy J. Kelly, who sided with the White House for a second time and denied the bureau official’s request for a preliminary injunction to remove Mick Mulvaney as acting head of the CFPB.

English, who has requested an expedited review of her case, argues that she is the rightful acting director, having been appointed as deputy director by former CFPB Director Richard Cordray the same day he officially resigned from his post on Nov. 24.

Citing his authority through the Federal Vacancies Act (FVRA), President Trump appointed Mulvaney as acting director hours after Cordray elevated the title of his former chief of staff. English filed suit two days later to block the appointment, arguing that a successor statute in the Dodd-Frank Act made her the lawful acting director until the Senate confirms Trump’s permanent appointee.

On Nov. 28, Judge Kelly denied English’s request for a temporary restraining order to block Mulvaney’s appointment on grounds that the FVRA gives the president the authority to appoint a replacement. English’s attorneys then filed an amended complaint on Dec. 6 requesting a preliminary injunction.

Unlike the temporary restraining order, an injunction can be appealed to the U.S. Court of Appeals if not granted. That’s what English’s attorneys did just two days after Judge Kelly denied her request.

“The President has designated Mulvaney the CFPB’s acting director, the CFPB has recognized him as the acting director, and it is operating with him as acting director,” Kelly wrote in his Jan. 11 ruling. “Granting English an injunction would not bring about more clarity; it would only serve to muddy the waters.”

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FTC Approves Consent Order in Texas Dealer’s Deceptive Advertising Case


WASHINGTON, D.C. — Following a public comment period, the Federal Trade Commission (FTC) said this week it has approved the final consent order settling its deceptive advertising charges against Cowboy AG LLC, a Dallas-based company doing business as Cowboy Toyota and Cowboy Scion.

The announcement is related to a December 2017 compliant related to Cowboy Toyota’s Spanish-language newspaper ads. According to the FTC, the dealership violated the FTC Act by misrepresenting the cost of purchasing or leasing cars as well as the qualifications or restrictions for financing or leasing cars. It also mispresented the availability of vehicles for sale, according to the FTC’s complaint.

The regulator also charged the dealership with failing to disclose credit or lease terms required under the Truth in Lending Act (TILA) or Consumer Leasing Act when it touted certain “triggering” terms of credit or lease, such as the monthly payment. The complaint also alleged that favorable terms were prominently stated in the Spanish-language ads, with material limitations to those terms provided only in fine-print English at the bottom.

The final order settling the FTC’s charges prohibits Cowboy Toyota from misrepresenting the cost of financing, buying, or leasing a vehicle. The order also requires the dealership to accurately represent any qualifications or restrictions on a consumer’s ability to obtain offered financing or lease terms, including restrictions based on their credit history.

The order also prohibits the dealership from misrepresenting the number of vehicles, makes, or models available for purchase or lease. Cowboy Toyota is also required to clearly and conspicuously disclose all financing and lease terms in its ads, as well as all related qualifications or restrictions. And if Cowboy Toyota makes a representation in one language, it must state clearly and conspicuously any material limitations in the same language, the FTC said.

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Judge Again Rules in Favor of Trump in Battle for Control of CFPB


WASHINGTON, D.C. — A federal judge once again sided with the White House in the battle for control of the Consumer Financial Protection Bureau, denying last Wednesday a request by CFPB Deputy Director Leandra English for a preliminary injunction to remove President Donald Trump’s appointee as acting head of the agency.

The ruling comes less than 50 days after U.S. District Judge Timothy J. Kelly denied English’s request for a restraining order to block President Trump’s appointment of White House Budget Director Mick Mulvaney as acting director. It now sets the stage for an appeal by English, who has said she is the rightful acting director.

“The Court finds that English is not likely to succeed on the merits of her claims, nor is she likely to suffer irreparable harm absent the injunctive relief sought,” Judge Kelly wrote in his 46-page decision. “Moreover, the balance of the equities and the public interest also weigh against granting the relief. Therefore, English has not met the exacting standard to obtain a preliminary injunction.”

Judge Kelly originally denied English’s request for a temporary restraining order to block Mulvaney’s appointment on Nov. 28. The ruling, however, pertained to the restraining order and not the merits of the case, with English’s attorney Deepak Gupta hinting that Kelly’s ruling “would not be the final answer.”

Gupta then filed an amendment complaint on behalf of English on Dec. 6 requesting a preliminary injunction. Unlike the temporary restraining order, the injunction can be appealed to the U.S. Court of Appeals for the D.C. Circuit if not granted.  Gupta gave no indication that Wednesday’s ruling would be appealed, although he expressed disappointment in Kelly’s decision in a Twitter post.

“The law is clear: President Trump may not circumvent the Senate confirmation process by installing his White House budget director to run the CFPB part time,” Gupta wrote. “Mr. Mulvaney’s appointment undermines the bureau’s independence and threatens its mission to protect American consumers.”

When Cordray formally resigned as CFPB director on Nov. 24, he elevated English, his former chief of staff, to deputy director. The move established her as acting director until the Senate confirms Trump’s permanent appointee.

Hours after Cordray’s announcement, Trump appointed Mulvaney as acting director, citing his authority through the Federal Vacancies Reform Act (FVRA). English filed suit two days later to block the appointment, arguing that she was the rightful acting director due to a successor statute in the CFPB-creating Dodd-Frank Act.

English’s attorneys also questioned whether allowing Mulvaney, who once characterized the bureau as a “sick joke,” to continue serving as a White House official would compromise the bureau’s independence. The argument was backed by the former lawmakers who championed the CFPB-creating Dodd-Frank Act.

“That was our intent, to strip this away from the politics of the moment, to give consumers the sense of confidence that there was one place here — when it came to their financial services — [where] there would be people watching out for them, regardless of political party or partisanship,” said former Sen. Chris Dodd during media call on Nov. 30.

Dodd joined former Rep. Barney Frank and more than 30 current and former members of Congress in writing one of five separate amicus briefs in support of English’s position. In Wednesday’s ruling, however, Judge Kelly said that argument is completely without support in the text of the Dodd-Frank, adding that the court “declines to create such a restriction out of whole cloth.”

“Simply put, Dodd-Frank does not prohibit the director of the OMB from also serving as the acting director of the CFPB,” Kelly wrote in his ruling.

“The President has designated Mulvaney the CFPB’s acting director, the CFPB has recognized him as the acting director, and it is operating with him as acting director,” Kelly continued. “Granting English an injunction would not bring about more clarity; it would only serve to muddy the waters.”

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Dealertrack Unveils 2018 Compliance Guide


NORTH HILLS, N.Y. — Integrated dealership technologies provider Dealertrack (div. Cox Automotive) has released its 2018 Compliance Guide, which outlines the changes and updates in compliance that will affect dealers in 2018. Now in its 13th year, the Compliance Guide is a popular resource on current trends and best practices in F&I compliance.

“Dealers understand that compliance can be critical to their bottom line, but many do not know how to balance staying current in today’s ever-changing regulatory environment with the day-to-day needs of running and growing their business,” said Jay Seirmarco, assistant general counsel at Cox Automotive. “For the last 13 years, Dealertrack has offered the Compliance Guide, free of charge, because we know how valuable such a resource can be for dealers seeking to improve their dealership’s operational efficiency.”

With “Confidence in Every Deal” as this year’s theme, the guide focuses on the Consumer Financial Protection Bureau’s examination of automotive dealer transactions under the Larger Participant Rule. It is further anticipated that the CFPB will seek to enforce compliance with federal consumer credit protection laws in auto financing. Additionally, it is expected that the Federal Trade Commission will continue to examine claims of so-called “yo-yo” financing and perhaps initiate claims related to lack of disclosure of applicable safety recalls for vehicles at dealerships.

To register to receive a complimentary copy of Dealertrack’s 2018 Compliance Guide, click here.

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UDS Launches Online Training Platform


Clearwater, Fla. – United Development Systems, Inc. (UDS) announces the launch of its e-Learning platform for F&I Training.

Available immediately to any F&I Professional looking to create an advantage for themselves, this robust learning management system (LMS), located within UDSTraining.com, delivers its first course, Ethics and Compliance Certification, via an engaging online experience.

“Many years in the making, our e-Learning platform is a true game changer to the way F&I Training content can be delivered today. With subsequent courses in the works, we only thought it be appropriate to release Ethics and Compliance Certification first, given the importance of doing things the right way,” says Randy Crisorio, UDS President and CEO.

The Ethics and Compliance Certification course itself was designed directly from our printed/classroom material with the guidance of a team of instructional designers. The course was built to be as engaging as possible with video intro’s to each lesson, full voiceover utilization and complete with quizzes plus a final exam. A printable/downloadable certificate of completion is awarded for those that pass the final exam.

“Being a 3-time award winner in the Compliance Training category of the annual Dealers’ Choice Awards solidified our decision to get this course built and available to the masses,” adds Crisorio.

For full course information, visit UDSTraining.com/ethics or contact Brian Crisorio at 800-282-1154.

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N.J. Dealer Agrees to Pay $136,000 to Resolve Consumer Fraud Investigation


NEWARK, N.J. — Sansone Hyundai has agreed to pay $136,000 to resolve charges that it failed to disclose the total price of certain advertised vehicles and charged consumers for F&I products listed at “no charge” on certain leases and sales contracts,” New Jersey Attorney General Christopher S. Porrino and the state’s Division of Consumer Affairs announced on Friday.

The dealership, winner of DealerRater’s 2016 and 2017 Consumer Satisfaction Award, also agreed to change its advertising, sales, and leasing practices, including disclosing all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line.

“Consumers should be able to purchase a new car without having to worry about misinformation and hidden costs,” said Attorney General Porrino. “This settlement ensures that consumers will receive transparency and honesty from this dealership, as required by law.”

The settlement was announced three days after New York’s Nissan of Rochelle, located two hours north of Sansone, agreed to pay more than $298,000 to settle Attorney General Eric Schneiderman’s charges that it willfully defrauded 298 car buyers by tacking on a window-etch programs after customers agreed to a price for the vehicle and often without their knowledge.

In a consent order with the Division of Consumer Affairs, Sansone Hyundai and its directors agreed not to add and charge for aftermarket products, such as window etch and service contracts, without the consumers’ knowledge and/or authorization, or represent to consumers that certain dealer-installed options are mandatory when they’re not.

The New Jersey dealership also agreed not to sell consumers aftermarket products that overlap or provide similar benefits the consumer has already purchased through the lease and sale transaction; accurately reflect in leases the “gross capitalized cost” as required by the consumer leasing act; provide consumers with an opportunity to review all leases and/or sales documents and/or aftermarket contracts prior to signing; and not identify the advertised prices of vehicles by reference to the MSRP sticker, when the vehicle includes an addendum to the MSRP sticker that reflects a higher total price.

The dealership must also comply with all applicable state and/or federal laws, rules, and regulations, including the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations, and the Consumer Leasing Act, according to the consent order.

“Dealerships must fully disclose all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line,” said Steve Lee, director of New Jersey’s Division of Consumer Affairs. “We will continue to enforce the laws and regulations in place to ensure consumers have the facts they need to make informed decisions.”

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