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Dodd-Frank, Dealers, andFinancers:The changing landscape of federalconsumer protections for car buyers andhow you can make a differenceJohn Van Alst, National Consumer Law CenterJessica HiemenzNational Consumer Law CenterThis webinar is sponsored with a grant from the Annie E. CaseyFoundation and is one of a series of webinars about working cars forworking families.March 31, 2011March 31, 2011Webinar
Presenter – John Van Alst Joined NCLC in 2006 as a Staff Attorney at theCenter’s Washington, DC Office. At NCLC John specializes in issues related tocar sales and finance. Prior to joining NCLC John work for seven yearsas an Attorney with Legal Aid of North Carolina.March 31, 2011Webinar
Dodd-Frank,Dealers, and FinancersThe changing landscape of federalconsumer protections for car buyers andhow you can make a difference.March 31, 2011Webinar
Agenda Origins of the new the bureau The new landscape of federal consumerprotections for car buyers Questions FTC new authority and Auto DealerTaskforce How you can be involved QuestionsMarch 31, 2011Webinar
Origins of the New the Bureau Elizabeth Warren call for new agency Identified several problems:–––––Complex productsLikelihood of certain products to failImpact of unsafe productsPatchwork of protectionsRegulation based on issuer of credit rather than theproductMarch 31, 2011Webinar
Fight over the Bureau Foreclosure crisis Recession Derivatives, securitization, and credit defaultswaps The butcher, the baker, the candlestick makerMarch 31, 2011Webinar
Fight over auto dealers New Allies––––Labor groups and unionsMilitaryCredit unionsThe President Dealers’ involvement in lending Auto dealers got exemption in house bill,covered in the senate bill, exemption inconferenceMarch 31, 2011Webinar
Poll Do those you serve ever experience problemsor abuses when obtaining financing at a cardealer?––––OftenSometimesNeverI wouldn't knowMarch 31, 2011Webinar
New Consumer Financial Protection Bureau Within the Federal Reserve but largelyIndependent Rules subject to veto by Financial StabilityCouncil (panel of regulators) Director appointed by President, confirmed bythe Senate Budget a percentage of Federal ReserveMarch 31, 2011Webinar
New Consumer Financial Protection Bureau Required Units within the Bureau include:––––ResearchComplaintsFinancial EducationService Members Affairs Responsibilities include:––––––Rule writingFinancial EducationCollecting ComplaintsResearchExaminationEnforcementMarch 31, 2011Webinar
CFPB rule writing Existing legislation: TILA, FDCPA, EFTA,FCRA, HMDA, RESPA New: regulate unfair, deceptive or abusive actsand practices Arbitration Exemptions:– Merchants– Some car dealersMarch 31, 2011Webinar
New Consumer Financial Protection Bureau Preemption AG enforcement Private enforcementMarch 31, 2011Webinar
Auto Dealer and Lender Regulation Exemption for dealers results in a more complexjurisdiction Lots possibilities Need for cooperation between regulators, stateattorneys general and othersMarch 31, 2011Webinar
Dodd–Frank Who Regulates Auto?UDAPRulemakingEnumeratedRulemakingSupervision EnforcementDealerstraditionalFTCFRBFTCNo federal FTC, BFTCCFPB, IC/FRBOCC/NCUAAGsLargeBanksCFPBCFPBCFPBCFPB, AGsRegulators,Non-BankLendersCFPBCFPBCFPBFTCCFPB, FTC,StateAG/RegulatorMarch 31, 2011Webinar
Other car related Issues Scope of non-mortgage, non-student loan TILAand CLA increased from 25,000 to 50,000– New rule issued by FRB March 24th, effective July 21,2011– Annually adjusted by CPI Authority to restrict arbitration- arbitration study Designated Transfer Date: July 21, 2011March 31, 2011Webinar
Public SentimentMarch 31, 2011Webinar
QUESTIONSMarch 31, 2011Webinar
Dodd–Frank FTC Rulemaking Previously, rulemaking at the FTC was acumbersome mix of administrative andadjudicative requirements Now, Administrative Procedures Act for FTC ActSections 5 and18(a)(1)(B)- Unfair or deceptiveacts or practices in or affecting commerceMarch 31, 2011Webinar
FTC Rulemaking 1916 - 1963 only procedural rulemaking 1964 light bulb advertising rule 1972 “cooling off” rule on door to door sales 1975 Section 18 added to FTC Act FTC Used Car RuleMarch 31, 2011Webinar
Poll Have consumers you work with experienced(check all that apply):– Misrepresentations about the financing or the car– Products or fees the consumer did not want orunderstand being added to the transaction– High pressure sales tactics for add-on products– Yo-yo or other attempts by the dealer to change theterms after the saleMarch 31, 2011Webinar
FTC Auto Dealer Task Force March 15 announcementFTC is hosting a series of public roundtablesThree to five cities around the United StatesThe roundtables will provide an opportunity forregulators, consumer advocates, industryparticipants, and other interested parties todiscuss consumer protection issues inconnection with motor vehicle sales and leasing.March 31, 2011Webinar
FTC Roundtable Topics What categories of motor vehicle dealers (i.e.‘‘franchise,’’ ‘‘independent,’’ and/or ‘‘buy here,pay here’’ offer credit or leases to consumers? What types of financing and leasing are offeredto consumers today? What practices involving motor vehicle dealersraise consumer protection issues? Howprevalent are these practices in the industry asa whole or in any subset of the industry?March 31, 2011Webinar
FTC Roundtable Topics Do motor vehicle dealers engage in ‘‘yo-yofinancing?’’ Do finance companies provide incentives orpayments to motor vehicle dealers in exchangefor consumers receiving more expensive credit? Do motor vehicle dealers misrepresent credit orlease terms to consumers? Do motor vehicle dealers charge interest ratemark-ups or up-front charges to consumers forcredit or leases about which consumers areunaware?March 31, 2011Webinar
FTC Roundtable Topics Is substantial negative equity from a priorpurchase, or money owed on a prior lease,frequently rolled into consumers’ next vehiclepurchases or leases? Do motor vehicle dealers engage in credit orlease packing, such as by including amounts forcredit insurance, guaranteed automobileprotection (‘‘GAP’’), or other add-ons intopayment amounts or other terms quoted toconsumers?March 31, 2011Webinar
FTC Roundtable Topics Do dealers include warranties, servicecontracts, and other add-ons in credit or leasecontracts? Do consumers experience discrimination inmotor vehicle financing or leasing? Do military personnel or their families faceunique consumer protection concerns whenpurchasing motor vehicles?March 31, 2011Webinar
FTC Roundtable Topics Do motor vehicle dealers fail to pay off liens ortrade-ins or otherwise fail to transfer title at asale? Do motor vehicle dealers use global positioningsystems or similar devices to locate and trackfinanced and leased cars? Do consumer protection issues exist inconnection with auto auction houses?March 31, 2011Webinar
QUESTIONSMarch 31, 2011Webinar
How you can get help To inform their efforts, the FTC would like tohear from people regarding problems related toauto dealers. Submit your comments online icleroundtables1 Information available at the Working Cars forWorking Families rg/March 31, 2011Webinar
Contact Information John W. Van Alst- National Consumer LawCenter– jvanalst@nclc.orgMarch 31, 2011Webinar
For more information To subscribe to the listserv of thoseinterested in Cars and Working Families justgo to: http://lists.nclc.org/subscribe/ andcheck the Auto Ownership, Finance, andPolicy list Visit the following website:– National Consumer Law Center’s Auto Page: March 31, 2011Webinar
For More Information onFederal Protections for Car Buyers7th Edition & Supplementof the Definitive Treatisefrom National ConsumerLaw CenterVisitwww.consumerlaw.org
Dodd-Frank, Dealers, and Financers: The changing landscape of federal consumer protections for car buyers and how you can make a difference John Van Alst, National Consumer Law Center Jessica Hiemenz National Consumer Law Center This webinar is sponsored with a grant from the Annie E. Casey
