Compliance

CUNA spells out TCPA concerns to FCC

WASHINGTON, D.C. - 

Another nationwide organization is asking federal regulators for assistance since technology has revolutionized the way finance providers and customers can communicate.

The Credit Union National Association (CUNA) recently filed a petition with the Federal Communications Commission regarding the Telephone Consumer Protection Act (TCPA), outlining how it can provide credit unions with regulatory relief from the “onerous” requirements for communicating with member-owners.

In the petition, CUNA proposes two routes for providing credit unions with greater ability to communicate with consumers about information they want and need on their cell phone. 

“CUNA is seeking regulatory relief on behalf of America’s credit unions and their members from an outdated TCPA statute, which has been made more obsolete for credit unions due to conflicting and confusing FCC interpretations of the statute,” said CUNA president and chief executive officer Jim Nussle said.

“Credit union members are being harmed by unclear guidance about how they can receive communications such as text messages about vitally important financial information including ways they can improve and protect their own finances,” Nussle continued.

“The Consumer Financial Protection Bureau has recognized that protecting consumers includes the ability to be in timely communication with them, and the FCC should do the same,” he went on to say.

Specifically, CUNA is requesting the FCC issue a declaratory ruling that wireless informational calls to credit union member-owners with whom the credit union has an established business relationship, or where the call or text is in fact free, be exempt from the TCPA's prior express consent requirement for autodialed and artificial or prerecorded voice calls.   

Changes to the TCPA were finalized by the FCC in 2015. CUNA is concerned that these changes in addition to a convoluted regulatory landscape from other FCC rulings and orders are stifling the ability of credit unions to contact members with important account information, due to risks of not being in compliance with the changes.  

CUNA also feels the changes do not take into account the changing ways consumers communicate, particularly the shift from landlines to cell phones.  

CUNA’s two proposed ways to equalize treatment of informational messages are: 

—The FCC should adopt an established business relationship exemption for credit union informational messages to cell phones. Adopting this exemption would place cell phone calls on equal regulatory footing with similar calls made to landline phones. Eliminating the antiquated distinction between landline and wireless calls is increasingly important now that the majority of consumers just have cell phone service. CUNA believes FCC precedent gives it authority to do so.

—The FCC should utilize its express authority to exempt calls that are without charge to the called party. CUNA requests the commission exempt credit union informational calls and texts that are in fact free to the called party, for example, because the call is free, under the called party's wireless plan. Although the commission has previously limited this exemption to instances where the callers provided assurances that they were capable of ensuring that calls would be free, Section 227(b)(2)(C) of the TCPA-the free to end user provision-imposes no such requirement. All this provision requires is that the call is in fact free to the consumer, not that the caller took steps to attempt to ensure the call is free.

CUNA believes adoption of these exemptions would restore the balance Congress sought to achieve between consumers' privacy interests and the legitimate interests of businesses to communicate with consumers. 

In the petition, CUNA also explained that adopting these exemptions would eliminate much of the confusion and uncertainty surrounding various conditions and exemptions established over time. 

CUNA went on to mention that granting the petition would align FCC policy with recent guidance from the CFPB that urges financial institutions to text consumers regarding financial information.

“Such guidance acknowledges that consumers benefit when ‘real-time information’ through text alerts help protect their finances,” CUNA said.

Key House member looking for wide-sweeping credit bureau changes

WASHINGTON, D.C. - 

The Equifax data breach is continuing to impact Experian and TransUnion, too.

First, New York’s attorney general asked for formal meetings as the Empire State intensified its financial services regulations. Now this week, Chief Deputy Whip Patrick McHenry, who also is vice chairman of the House Financial Services Committee, introduced a bill to broaden federal oversight of the credit bureaus.

McHenry, a North Carolina Republican, is championing H.R. 4028, the Promoting Responsible Oversight of Transactions and Examinations of Credit Technology Act of 2017, or the PROTECT Act. 

The lawmaker explained this measure would amend the Fair Credit Reporting Act to allow national security freezes for the files and credit records of protected consumers. The act also would create a nationwide framework for credit freezes.

Additionally, McHenry’s office mentioned the measure would establish supervision and examination of large consumer reporting agencies under the Federal Financial Institutions Examination Council Act.  Furthermore, the legislation would prohibit the largest credit reporting agencies from using Americans’ Social Security Numbers as a basis for identification by 2020.

“The Equifax data breach has harmed my constituents in western North Carolina and Americans across the country,” McHenry said. “It exposed a major shortcoming in our nation’s cybersecurity laws and Congress must act. The bill I’ve introduced today takes an important first step in providing meaningful reforms to help Americans who have been impacted by this breach. It is focused on prevention, protection and prohibition.

“It prevents future harm to all Americans by requiring the largest credit reporting agencies to be subjected to the same standards and supervision as the rest of the financial industry," McHenry continued. "It protects Americans by creating a national credit freeze that actually works. Finally, it prohibits the largest credit reporting agencies from continuing to rely upon the most sensitive of Americans’ personal information: our Social Security Numbers.”

 

 

 

7 differences between career seekers and job seekers

CLEVELAND - 

While Cox Automotive’s latest workforce study uncovered some startling data and Hireology presented some branding suggestions, Automotive Personnel chief executive officer Don Jasensky reiterated the seven differences he has seen between “job seekers” and “career seekers.”

Jasensky insisted that “there is a world of difference,” as finance companies and dealerships look to fill their workforces with the best possible employees to finalize contracts, complete deliveries and the myriad of other tasks that happen in the automotive retail space.

“Career seekers are looking to ‘become something more’ and ‘add career value’ when they seek a new position,” Jasensky said in a blog post on his company’s website.

Jasensky then explained the seven differences between these individuals that he teaches recruiters and clients. They include:

—Career seekers will likely put more effort in becoming very good at their work.

—Career seekers will invest more money, effort and energy in developing their careers.

—Career seekers are looking long-term and will make decisions that will benefit them long-term.

—Because they are looking long-term, career seekers will be more selective and take more time to make a decision.

—Career seekers will talk to mentors and other trusted people before committing to a new position.

—Job seekers will come to interview “all enthused” and will “jump through any hoop,” which is attractive to many managers but is not an indicator of high performance.

—Job seekers will accept a position quicker with less investment in researching the company and the position.

“Career seekers will be excited the day they get started because they are beginning a new chapter in their career,”  said Jasensky, who also is a board member of the National Automotive Finance Association. “The job seeker will be happy that the ordeal of finding a job is over. Entirely different mindsets."

More workforce recommendations and current industry job listings can be found by going to Automotive Personnel’s website.

Westlake part of third DOJ settlement in 13 months over SCRA violations

WASHINGTON, D.C. - 

For the third time in about 13 months, the Justice Department has reached a settlement with a finance company for violating the Servicemembers Civil Relief Act (SCRA) in connection with vehicle repossessions.

This time Westlake Financial Services and its subsidiary, Wilshire Consumer Capital, have agreed to pay $760,788 to resolve allegations that the companies did not follow federal regulations by repossessing 70 vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders.

During its investigation, the Justice Department found that Westlake and Wilshire had failed to adopt policies and procedures necessary to ensure that their motor vehicle repossessions complied with the SCRA. Westlake purchases services subprime and near-subprime retail installment sales contracts while Wilshire, which does business as Wilshire Consumer Credit, originates and services vehicle title loans

Officials said the agreement requires Westlake and Wilshire to provide $10,000 in compensation to each of the 70 affected servicemembers, plus any lost equity in the vehicle with interest.  Westlake and Wilshire also must repair the credit of all affected servicemembers, pay a $60,788 civil penalty to the United States and determine, in the future, whether any vehicle it is planning to repossess is owned by an SCRA-protected servicemember. 

If so, Westlake and Wilshire will not repossess the vehicle without first obtaining a court order or valid waiver of SCRA rights.  The agreement also contains provisions ensuring that all eligible servicemembers will receive the benefit of the SCRA’s 6 percent interest rate cap on their auto loans.

The DOJ indicated the agreement resolves the claims and causes of action asserted in the United States’ Complaint against Westlake and Wilshire filed in the United States District Court for the Central District of California, and the parties will stipulate to the dismissal of the complaint once Westlake and Wilshire deposit the funds required by the settlement agreement into an escrow account and pay the civil penalty to the United States. 

Westlake and Wilshire will contact servicemembers to be compensated through this settlement in the upcoming months.  They will locate victims and distribute payments at no cost to servicemembers.

Officials shared that this matter came to the department’s attention in 2016, when the Consumer Financial Protection Bureau’s Office of Servicemember Affairs notified the department that it had received a complaint that Westlake and Wilshire were conducting motor vehicle repossessions in violation of the SCRA.

The Justice Department reiterated that the SCRA protects servicemembers against certain civil proceedings that could affect their legal rights while they are in military service.  It requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service. The court may delay the repossession or require the finance company to refund prior payments before repossessing.

The court may also appoint an attorney to represent the servicemember, require the finance company to post a bond with the court and issue any other orders it deems necessary to protect the servicemember. 

By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, officials said Westlake and Wilshire prevented servicemembers from obtaining a court’s review of whether their repossessions should be delayed or adjusted to account for their military service.

This development arrived after the Justice Department reached an agreement with CitiFinancial Credit Co. in September as well as Wells Fargo Dealer Services last September for SCRA violations.

“The members of our armed forces should be able to devote their full attention to their duties without having to worry about whether their legal rights will be violated by creditors,” Acting Assistant Attorney General John Gore said.  “We honor all servicemembers for their sacrifice and service to our nation, and this settlement signals our ongoing commitment to protecting the rights of our men and women in uniform.”

Acting United States Attorney Sandra Brown of the Central District of California added, “The women and men who serve in the armed forces protect our country from danger every day.

“Given the enormous sacrifice they make for all of us, we have a responsibility to ensure that their rights are protected. Westlake and Wilshire did not live up to this responsibility,” Brown went on to say. “But the settlement we have reached will fix the lending practices that led to violations, and vindicate the rights of the servicemembers affected.”

Mississippi attorney general subpoenas Credit Acceptance

SOUTHFIELD, Mich. - 

For the second time in about a year, Credit Acceptance is dealing with an attorney general subpoena.

The finance company acknowledged late on Friday through a filing with the Securities and Exchange Commission that it received a subpoena from the Mississippi attorney general on Aug. 14. Credit Acceptance said the subpoena is relating to the origination and collection of non-prime vehicle installment contracts in the state of Mississippi.

“We are cooperating with the inquiry and cannot predict the eventual scope, duration or outcome at this time,” the company said in the filing. “As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.”

The matter in Mississippi arrived 16 months after Credit Acceptance revealed a similar situation originating from the top law enforcement officer in Maryland.

Credit Acceptance confirmed in a regular filing with the SEC that the company received a subpoena from the Maryland attorney general on March 18, 2016, relating to the company’s repossession and sales policies and procedures within that state.

Senior vice president and treasurer Doug Busk touched on that matter during Credit Acceptance’s conference call when the finance company discussed its second-quarter results.

“In terms of the Maryland matter, as we disclosed, the subpoena is focused on our repossession and sale policies and procedures in the state of Maryland,” Busk said. "Not unusually in these types of matters, we don’t really have any insight into why we received the subpoena. We are in the process of providing responsive information to the AG in the state of Maryland.

“I don't think there’s any commonality relative to this and other subpoenas or regulatory actions. I think it’s just more evidence of a very heightened regulatory environment out there,” he continued.

“In terms of the collection practices, being in business as long as we have, we’ve been focused on doing things right from a regulatory perspective. So we assess the (Consumer Financial Protection Bureau’s) position on that and really anything else and make changes to our business if we think it’s necessary to meet their expectations,” Busk went on to say.

ProMax enhances certified integration with Dealertrack

DAVENPORT, Iowa - 

Dealer Marketing Services, the makers of ProMax, on Monday announced significant enhancements to its certified integration with Dealertrack.

ProMax is a certified partner of most major dealer management systems, and has offered a certified integration with Dealertrack since 2009. The newly updated two-way integration with Dealertrack further facilitates the automated transfer of data between ProMax and Dealertrack, including inventory, repair orders, customers, service and delivered deals.

The company insisted this data flow, updated multiple times daily, can enable dealers to streamline their processes and improve accuracy.

“With the continued growth and evolution of technology and data in automotive retail, it’s a strategic advantage to work with innovative partners such as ProMax to expand and enhance our Opentrack DMS program,” said Candy Lucey, senior director of marketing at Dealertrack.

“Opentrack substantiates our vision of an open platform approach designed to give third-party partners such as ProMax the maximum flexibility to use our platform to best meet the needs of our dealers,” Lucey continued.

“This enhanced integration is great news for our mutual dealer customers,” said ProMax chief executive officer John Palmer, whose company provides lead-generation solutions along with other products associated with credit reports, dealer websites and more.

“We’re always looking for ways to help our dealers succeed, and this updated integration will go a long way towards doing that,” Palmer went on to say.

NAF Association launches Phase 2 of Collector and Underwriter Compliance Certificate Programs

HANOVER, Md. - 

Along with highlighting seven major findings and availability of the 2017 Non-Prime Automotive Financing Survey, the National Automotive Finance Association on Friday announced the next stage of its compliance training offerings.

Building off of the momentum generated by wide-spread leveraging of its Compliance Certification Program, the NAF Association launched what it’s calling Phase 2 for the Collector and Underwriter Compliance Certificate Programs. The NAF Association believes Phase 2 of these programs provides the necessary second educational step for collectors and underwriters to stay compliant in a difficult regulatory environment.

“We have found that many NAF Association member finance companies rely on the Compliance Certificate Program to provide necessary front line education for their staff,” said Jack Tracey, executive director of the National Automotive Finance Association.

"Phase 2 of the program equips company management with the opportunity to assess how collectors and underwriters have retained the compliance knowledge acquired in Phase I as well as providing education on current compliance issues,” Tracey continued.

The NAF Association — also one of the industry partners in the orchestration of Used Car Week that begins on Nov. 13 in Palm Springs, Calif. — highlighted both the collector and underwriting courses include coverage of the Equal Credit Opportunity Act (ECOA), the FTC Act and Unfair, Deceptive or Abusive Acts or Practices (UDAAP) and updates on other recent regulatory developments.

To learn more about the Collector and Underwriter Compliance Certificate Programs, go to www.nafassociation.com.

The growth in education offerings arrives as the non-prime automotive financing sector experienced the sixth consecutive year of market growth in 2016, according to the 2017 Non-Prime Automotive Financing Survey co-sponsored by the National Automotive Finance Association and American Financial Services Association.

Through the combined efforts of both associations, 54 companies participated in this year’s survey. This is the 21st year of the survey, started by the NAF Association, and the third year both trade associations have teamed up as co-sponsors. This effort is thought to be the most comprehensive survey of the non-prime auto financing sector.

Over the past few years, significant improvements to the survey have been made. For example, an easier data gathering approach through a web survey and a new reporting format give the report broader and more comprehensive coverage and provides information that cannot be found anywhere else.  Contributing to the report are TransUnion, FactorTrust and Black Book, which are providing additional market insight by supplying data and analysis on nonprime auto financing. 

Key findings from the survey include:

• Sixth consecutive year of market growth

• Competition increases, pace slows

• Banks led market share development with positive gain in 2016

• Several indicators showed a trend towards improved quality including higher credit scores for new and used, decreases in payment-to-income, decreases in average annual net charge-off and annualized repossession rate. 

• Delinquency increases

• Operating expenses increase

• Profit reduction

Benchmark Consulting International administered the survey and provided the report analysis. Participating finance sources responded to survey questions covering topics such as originations, servicing and loss management. The results are illustrated in 129 graphs.

The survey report is distributed at no cost to finance company participants. Others may purchase a copy of the report for $500. To purchase, contact Diane Merino at the National Automotive Finance Association at (717) 676-1533 or Diane.merino@nafassociation.com.  

More than 10K professionals have completed RISC’s compliance certification program

TAMPA, Fla. - 

Recovery Industry Services Co. (RISC) recently reached a new threshold of industry professionals completing its Certified Asset Recovery Specialist (CARS) and CARS-FC certification program.

Since it was launched in 2002, RISC tabulated that it has certified more than 10,000 individuals through its recovery agent training offering that is geared to meet the demands an ever-increasing focus on compliance.

RISC insisted that finance companies, forwarders and repossession professionals have sought standardized training programs and reporting to internal and third party auditors as well as the Consumer Financial Protection Bureau. The industry’s focus on compliance has created a surge in the number of companies that require CARS certification for all employees.

“Since June, more than 3,000 individuals have become CARS certified, with another 2,800 professionals currently preparing for the exam,” RISC founder Stamatis Ferarolis said.

“By the end of Q3, the nation’s five largest forwarding companies had certified all of their employees with CARS-FC, and more than 600 repossession companies have begun the process of having all their employees, not just their drivers, CARS trained,” Ferarolis continued.

“We are proud to be the only compliance certification program accepted nationwide by all lenders and forwarders,” he went on to say. “From the CARS certification program to vendor vetting to lot inspections, RISC has developed a comprehensive solution that ensures compliance by enforcing standards and teaching individuals how recover vehicles safely and handle sensitive data.”

This spring, at finance companies’ request, RISC created the Certified Asset Recovery Specialist-Forwarding Company (CARS-FC) training program as an extension of the industry standard CARS program. CARS-FC consists of a comprehensive set of applicable laws and regulations specific to forwarding company personnel to provide standardized training in all areas of compliance.

RISC recognized the following forwarding companies that committed and certified their personnel on the standard RISC CARS-FC program. RISC praised the commitment to the effort of standardized compliance of these firms, including:

• Primeritus Financial Services
• ALS/Resolvion
• American Recovery Service
• Del Mar Recovery Solutions
• MVTRAC         
• Plate Locate
• Synergetic Communication

For questions about the RISC CARS or RISC CARS-FC program, or to sign up your company, contact RISC president and chief operating officer Holly Balogh at holly@riscus.com.

Hudson Cook’s Musselman named vice chair of ABA Banking Law Committee

HANOVER, Md. - 

Meghan Stringer Musselman, a partner in the Maryland office of Hudson Cook, has been appointed vice chair of the American Bar Association (ABA) Banking Law Committee for a three-year term.

With approximately 1,950 members, the mission of the Banking Law Committee is to act as principal Business Law Section Committee dealing with laws relating to banking and financial services activities conducted through banks and other regulated intermediary financial institutions.

In her practice, Musselman advises banks, sales finance companies, installment lenders and other similar creditors in the development and maintenance of consumer credit programs, compliance management systems and vendor management programs. On behalf of investor clients, she conducts due diligence for consumer credit programs, including auto finance companies, online lending platforms, mortgage loan companies, mortgage loan servicers and consumer finance companies.

Musselman also counsels clients on privacy and data security issues under the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.

In addition to her participation on the Banking Law Committee, Musselman is also active in the ABA Consumer Financial Services Committee and currently serves as vice chair of the Executive Council of the Federal Bar Association’s Banking Law Section.

“We are proud that Meghan has been appointed to this committee during such a significant time for the banking industry,” Hudson Cook chair Michael Benoit said. “Meghan’s deep experience working in banking and consumer financial services law makes her an excellent choice to serve as vice chair of this committee.”

From the editor: The CFPB and a fire alarm

WASHINGTON, D.C. - 

There didn’t appear to be any obvious connection between a representative from the Consumer Financial Protection Bureau finishing his presentation during the National Policy Conference hosted by the National Independent Automobile Dealers Association and the hotel fire alarm activating as a question-and-answer session started.

While not trying to perpetuate some wild conspiracy theory, perhaps the underlying simmering of dealers in the room triggered the fire alarm on Tuesday morning.

The CFPB’s Damion English took the stage in front of what could have been considered a hostile audience — nearly 200 independent dealers and other automotive industry service providers who might have had varying assessments of how the bureau is impacting and possibly curtailing their businesses. English serves as the bureau’s auto finance program director and came to the agency after prior positions with Regional Acceptance, Capital One Auto Finance, American Honda Finance and as finance manager for the Victory Automotive Group.

English insisted the bureau is trying to gather all the information it can about how vehicle financing and deliveries happen, stressing that the CFPB wants input from dealers “because you know your business better than we do.” 

Apparently making a favorable impression, an abbreviated Q&A segment started with one dealer telling the gathering that English was “the coolest person I’ve seen from the CFPB.” English welcomed the kind words by replying, “Thank you. I appreciate that. I’m going to tell my mom!”

Then moments later, the fire alarm began and the staff at the Dupont Circle Hotel asked us all to depart the facility. Outside, as the Washington, D.C. Fire Department arrived to confirm it was a false alarm, several dealers approached English and his two other CFPB colleagues for informal conversations. They all appeared civil but certainly intense.

Dealers are concerned about the CFPB’s new rule regarding arbitration. NIADA came out with multiple efforts to keep it from going into effect as it is on track to do so early next year.

NIADA pointed out that the CFPB’s study on arbitration found consumers receive on average more than $5,000 in arbitration hearings compared to roughly $32 in class-action litigation — if they receive anything at all.

“We are disappointed that the bureau has decided to adopt this ill-conceived rule,” NIADA chief executive officer Steve Jordan said when the bureau finalized the rule back in July. “(This) action shows the CFPB has decided to put the interests of class-action lawyers above those of the very consumers the bureau is mandated to protect.

“Arbitration has proven to be a faster, less expensive and more effective means of resolving consumer disputes than class-action lawsuits. And consumers who receive an award in arbitration almost always receive more than they would in a class-action lawsuit, a point proven by the CFPB’s own research,” Jordan continued.

“This rule will force small businesses to bear additional costs in defending class-action litigation, particularly meritless suits,” Jordan went on to say. “Those costs will ultimately be borne by consumers, and in the case of those who are credit-challenged, it could prove to be too much.”

The thought that dealers could face class-action lawsuits instead of settling matters via arbitration is leaving NIADA members uneasy to say the least. Later on Tuesday when the Small Business Administration made its conference presentation, multiple attendees fervently implored that the government entity designed to aid businesses such as independent dealers to intervene.

“Somebody in this town has got to help us,” one attendee said at the venue located less than a test-drive distance away from the White House and Capitol Hill.

The House approved resolution on July 25 leveraging authority provided under the Congressional Review Act (CRA) to stop the CFPB’s final rule prohibiting the use of class action waivers in arbitration clauses. Despite all House Democrats and one Republican voting against H.J. Res 111, the resolution cleared the chamber by a vote of 231-190.

Ever since, it’s been the Senate’s turn, but various online reports have indicated the margin for a similar resolution getting the necessary 51 votes for approval is slim — if it exists at all.

By now, dealers who went to our nation’s capital this week likely have returned to their stores to secure inventory, finalize deliveries and complete a long list of other chores necessary to remain a profitable enterprise. I applaud those dealers who participated in NIADA’s activities. Any fruits from the efforts might take some time to ripen, but at least they were planted.

Nick Zulovich is senior editor of SubPrime Auto Finance News and can be reached at nzulovich@cherokeemediagroup.com.