NIADA gives CFPB two recommendations for defining ‘risks to consumers’
Image courtesy of the National Independent Automobile Dealers Association.
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Regulators often gravitate toward consumer risk when constructing and enforcing rules on businesses such as dealerships.
The National Independent Automobile Dealers Association recently asked for some clarity from the Consumer Financial Protection Bureau on that subject.
NIADA submitted comments to the CFPB on its proposed rule, adopting a standard definition of “risks to consumers” under Section 1024(a)(1)(C) of the Consumer Financial Protection Act of 2010.
NIADA explained in an online post that this rarely used provision allows the CFPB to supervise nonbank financial entities if it determines they are engaging in conduct that poses risks to consumers in connection with consumer financial products or services.
The association said the proposed rule aims to bring greater clarity and consistency to how the CFPB exercises this authority.
NIADA’s comments highlighted the “robust” oversight framework governing independent dealers at both the federal and state levels.
NIADA urged the CFPB to consider this existing oversight when defining what constitutes a consumer risk. Specifically, NIADA made two key recommendations:
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- Explicit exemptions: The final rule should exempt entities like independent automobile dealers that are already subject to comprehensive and overlapping federal and state oversight.
- Complaint standards: The CFPB should limit consideration of consumer complaints to those alleging concrete, actionable harm, not merely dissatisfaction with a customer experience or speculative claims lacking evidence of misconduct.
“NIADA remains optimistic that its input will help shape CFPB rulemaking in a way that promotes fairness, reflects the unique structure of the independent automobile dealer marketplace, and aligns with the CFPB’s current supervisory priorities, which have shifted away from nonbank financial institutions since the start of the Trump administration,” NIADA said.
“NIADA will continue to identify and advocate for common-sense regulatory relief at the federal level. At the same time, NIADA reminds dealers that, in light of these and other recent announcements from the CFPB, they should remain vigilant in their compliance efforts,” the association continued.
“State regulatory and law enforcement officials across the country are widely expected to exercise their own supervisory and enforcement authorities in the absence of robust federal oversight,” NIADA went on to say.
