NY Regulators Shut Down Condor Capital


Condor Capital is no longer originating and servicing vehicle installment contracts for dealers who cater to subprime customers in New York or more than two dozen other states.

Just before the holiday, the New York Department of Financial Services submitted a final consent judgment to be approved by the Empire State’s court system to settle the department’s lawsuit against Condor Capital that first sprouted last spring.

New York Superintendent of Financial Services Benjamin Lawsky sent the order against, Condor, a subprime auto finance company based in Long Island, and its sole shareholder, Stephen Baron.

Among other violations, Lawsky claimed the defendants deceptively retained millions of dollars owed to vulnerable borrowers and overcharged them for interest in violation of the Truth in Lending Act.

Under the terms of the final consent judgment, Condor and Baron will make full restitution plus 9 percent interest to all aggrieved customers nationwide, which officials estimated to be $8 to $9 million.

Furthermore, Baron and Condor Capital are ordered to pay a $3 million penalty and admit violations of New York and federal law.

Following a sale of its remaining loans in a manner that ensures appropriate consumer protections, NYDFS said Condor Capital will surrender its licenses in all states, which include:

—North Carolina
—New Jersey
—West Virginia

Lawsky highlighted the lawsuit against Condor and Baron was the first legal action initiated by a state regulator under section 1042 of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, which empowers state regulators to bring civil actions in federal court for violations of Dodd-Frank’s consumer protection requirements.

“We will not tolerate companies that abuse New Yorkers and other customers — particularly vulnerable subprime borrowers who can least afford it,” Lawsky said.

“This case demonstrates that the Dodd-Frank Act provides a powerful new tool for state regulators to pursue wrongdoing and obtain restitution for consumers who were abused,” he continued.

“We hope other regulators across the country will consider taking similar actions when warranted,” Lawsky went on to say.

NYDFS first filed a complaint and obtained a temporary restraining order against Condor and Baron on April 23. 

The state’s court system granted the NYDFS’ motion for a preliminary injunction and appointed a receiver on May 13. 

Officials indicated the Receiver will remain in place until Condor’s loan portfolio is sold, the penalty and restitution are paid, and Condor has surrendered all of its licenses. 

As of Dec. 19, the receiver has paid more than $5 million in restitution.

As part of the final consent judgment, officials explained Condor admitted to violations of Dodd-Frank, the Truth in Lending Act, the New York Banking Law, and the New York Financial Services Law.

Furthermore, officials added Baron admitted to violating Dodd-Frank by providing substantial assistance to Condor’s law violations.

NYDFS charged that Condor concealed from its customers and the department the fact that thousands of its customers had refundable positive credit balances (such money owed by Condor to a customer as a result of an overpayment of the customer’s account).

Officials determined Condor retained these positive credit balances for itself and maintained a policy of failing to refund positive credit balances except when expressly requested by a customer. 

“Condor did not notify its customers when positive credit balances remained in their accounts at the conclusion of their loans,” NYDFS officials said.

“Furthermore, Condor programmed its website to terminate customers’ access to their account information once their loans were terminated, even if the customers had positive credit balances in their accounts,” the continued.

In addition, the agency asserted that Condor represented to the New York State Comptroller that it had no unclaimed property when in fact Condor was required to report its customers’ positive credit balances to the Comptroller.

And NYDFS said the company committed other violations associated with contract terms.

Officials said Condor also violated the Truth in Lending Act by calculating the interest it charged its customers based on a 360-day year and applying the resulting daily interest rate to its customers’ loan accounts each of the 365 days during the year. They explained this practice resulted in a difference in its customers’ APR in excess of the one-eighth of 1 percent tolerance permitted under the Truth in Lending Act.

“Even more egregiously, after being informed by regulators that this practice violated the Truth in Lending Act, Condor on multiple occasions attempted to add an additional one-eighth of 1 percent interest back to customers’ accounts,” officials said.

NYDFS pointed out one other compliance area where Condor Capital failed to meet regulatory protocols.

Officials claimed Condor also endangered the security of its customers’ personally identifiable information. Among other information security lapses, they discovered Condor left stacks of hard-copy customer loan files lying openly around the common areas of Condor’s offices.

“Condor also failed — despite repeated directives from the department — to adopt basic policies, procedures, and controls to ensure that its information technology systems (and the customer data they contain) were secure,” NYDFS officials said.

NYDFS noted the final consent judgment submitted to the court requires Condor’s CEO to pay damages to any customer who the department determines suffered identity theft as a result of Condor’s mishandling of their private information.

As SubPrime Auto Finance News reported last spring, the company’s website indicated Condor Capital was founded in 1994 by a management team with more than 50 years of auto financing experience.

According to Condor’s most recent annual report filed with NYDFS, at the end of 2013, Condor held more than 7,000 loans to New York customers with total outstanding balances of more than $97 million. That reported showed Condor’s 2013 loan portfolio contained aggregate outstanding loans of more than $300 million nationwide.

For the year, Condor reported net after-tax income of approximately $7 million on operating income of approximately $68.7 million, DFS said.

Regulatory Updates Highlight Top 10 Stories of 2014

CARY, N.C. - 

As a part of the last SubPrime News Update of the year before the Cherokee Media Group team breaks for the holidays, the publication wanted to share a rundown of the top 10 stories that generated the most reader interest in 2014.

Not surprisingly the majority of these leading stories had a connection to a significant regulatory development with agencies such as the Consumer Financial Protection Bureau, the Federal Trade Commission and the Department of Justice.

1. SubPrime Auto Finance Executive of the Year Winner Named

CARY, N.C. — SubPrime Auto Finance News has revealed the recipient of this year’s SubPrime Auto Finance Executive of the Year award, an honor sponsored by Black Book Lender Solutions.

The accolade is going to Ian Anderson, president of Westlake Financial Services, which reached $2 billion in total receivables earlier this year.

Sparked by the some of the best months in company history this summer, Westlake’s portfolio now has that total receivables figure connected to more than 270,000 customer accounts.

2. Credit Acceptance Subpoenaed by Justice Department

SOUTHFIELD, Mich. — Another day, another finance company acknowledges it has received a subpoena from the U.S. Department of Justice.

Credit Acceptance Corp. posted a filing with the Securities and Exchange Commission stating the company that specializes in subprime auto financing received a civil investigative subpoena from the Justice Department pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

The subpoena is directing Credit Acceptance to produce certain documents relating to subprime automotive finance and related securitization activities.

3. CPS to Pay $5.5M to Settle FTC Charges

WASHINGTON, D.C., and IRVINE, Calif. — The Federal Trade Commission said that Consumer Portfolio Services will pay more than $5.5 million to settle charges that the subprime auto finance company used “illegal tactics” to service and collect consumers’ loans, including collecting money consumers did not owe, harassing consumers and third parties, and disclosing debts to friends, family and employers.

According to regulators, CPS agreed to refund or adjust 128,000 consumers’ accounts constituting more than $3.5 million and forebear collections on an additional 35,000 accounts to settle charges the company violated the FTC Act.

The FTC also indicated CPS will pay another $2 million in civil penalties to settle FTC charges that the company violated the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA)’s Furnisher Rule.

4. CFPB Allegations Against American Honda Finance

TORRANCE, Calif. — First, the Consumer Financial Protection Bureau and the U.S. Department of Justice delivered notices to Toyota Motor Credit Corp., alleging discriminatory practices regarding vehicle financing.

Now, American Honda Finance revealed it also received the same allegations from these federal regulators.

In documents filed with the Securities and Exchange Commission, officials from the CFPB and DOJ sent a letter to Honda’s captive finance company saying they have authorized enforcement actions alleging discrimination in automobile loan pricing to certain borrowers by dealers and alleging the loan pricing disparities were caused by AHFC’s business practices related to dealers.

5. Pelican Auto Finance’s Plan to be a Top Subprime Player

CHADDS FORD, Pa. — Pelican Auto Finance is using what executives describe as a “crawl-walk-run approach” to growth in the deep subprime auto financing world. And they want to start running to the point where the company’s portfolio ranks among the top five institutions nationwide, blending together a business strategy of being an indirect lender for franchised and independent dealers to tap as well as a purchaser of paper from buy-here, pay-here operators.

“Right now we have significant capitalization behind us,” Pelican chief executive officer Troy Cavallaro told SubPrime Auto Finance News.

“I think a year from now we’re going to be well positioned to be one of the top four lenders in the deep subprime space,” Cavallaro continued. “I understand that Westlake’s portfolio is well over a $1 billion and Credit Acceptance’s portfolio is well over $1 billion. We don’t expect to get there in the next 12, 18 or 24 months. But we think we can position ourselves to be the No. 4 or No. 5 deep subprime lender in the nation. That’s our goal is to get there.”

6. Dodd-Frank Power Triggers Action Against NY Lender

NEW YORK —The Dodd-Frank Act provided the foundation for more regulation of auto financing by federal regulators. Now a state-level agency is leveraging Dodd-Frank to seek orders against a New York-based subprime lender.

Benjamin Lawsky, who is New York’s Superintendent of Financial Services, obtained a temporary restraining order in federal court against Condor Capital Corp., a subprime auto lender headquartered on Long Island, and its owner, Stephen Baron.

Lawsky explained a DFS investigation uncovered that allegedly Condor has engaged in a longstanding scheme to steal millions of dollars from its customers — among other unfair, abusive, and deceptive practices.

7. Investment Firm to Merge Flagship Credit Acceptance & CarFinance Capital

CHADDS FORD, Pa., and NEW YORK — The investment firm that oversees two subprime auto finance companies — Flagship Credit Acceptance and CarFinance Capital — announced that it is merging the two operations together.

Officials from the alternative asset management unit of Perella Weinberg Partners explained the combined company now will total assets in excess of $2 billion.

“Since forming Flagship and CarFinance, we have been pleased with the performance and strong execution of both companies,” said David Schiff, partner at Perella Weinberg Partners and portfolio manager of the asset based value strategy. “Together, the two companies will create a top-tier independent auto finance company with enhanced scale, lower cost of capital, superior cost controls and more efficient access to the capital markets.”

8. Report: 6 Finance Companies Subpoenaed in NY

NEW YORK — Regulatory investigations of auto finance companies are piling up as now reportedly the New York Department of Financial Services is joining the fray.

An online report citing an anonymous source indicated New York state’s financial services regulator subpoenaed the captive arms of Ford, Honda, Nissan and Volkswagen as well as Santander and TD Bank.

A person familiar with the matter told Reuters the developments are part of a probe of possible consumer abuses in subprime auto lending.

9. Department of Justice Subpoenas GM Financial

FORT WORTH, Texas — As the company completed a property purchase to house more personnel, General Motors Financial said in a regulatory filing that the company has been subpoenaed by the U.S. Department of Justice.

According to the paperwork posted with the Securities and Exchange Commission, Justice Department officials served GM Financial with a subpoena on July 28.

Company officials said the subpoena directs them to produce certain documents relating to their and their subsidiaries’ and affiliates’ origination and securitization of subprime auto loan contracts since 2007 in connection with an investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

10. Latest House Bill Aims at Curbing CFPB’s Authority

WASHINGTON, D.C. — During the same week the Consumer Financial Protection Bureau “strongly urged” companies to make credit scores more readily available, a bill passed through the U.S. House aimed at limiting the authority of the bureau, which the measure’s author called, “a dangerously powerful and dangerously unaccountable agency.”

As currently constructed, Rep. Sean Duffy, a Wisconsin Republican who authored H.R. 3193 — known as the Consumer Financial Freedom and Washington Accountability Act — indicated the bill would accomplish four objectives.

SubPrime Auto Finance News gratefully thanks all subscribers, advertisers and industry partners for their support, interest, readership and feedback throughout the year.

Regular updates on industry trends, analysis and more will return on Jan. 2.

In the meantime, happy holidays and best wishes for a great 2015.

Best regards,
Nick Zulovich
Editor, SubPrime Auto Finance News

4 Collection & Payment Processing Trends to Watch


BillingTree offered four trends the payment processing solutions provider thinks will impact the industry in the coming year.

The projections cover a wide array of elements auto finance executive might or might not already see on their radar, as well.

1. Payments Really Are Going Mobile

BillingTree indicated that in North America, the number of mobile transactions has almost doubled since 2013 to 17 percent of all transactions. The company mentioned 1 million people signed up for Apple Pay in the first 72 hours after its October launch.

BillingTree also menitoned Google Wallet, which has been in the market place since 2012, has also come to the forefront of consumer thinking.

“Payment processors and collectors must incorporate mobile payment options for an increasingly mobile customer base in 2015,” the company said.

2. EMV Is Coming

In October of next year, officials noted the liability shift of Europay, MasterCard and Visa (EMV) will take place in the U.S. They explained this mandate means any company that processes card payments is required to offer a chip-and-PIN payment system — or risks being liable for counterfeit fraud.

Europe rolled out EMV in 2004, switching liability to merchants in January 2005. Now 10 years later the U.S. is using the same approach to convince merchants to leave magnetic swipe behind.

“Compliance remains a strict requirement for merchants switching to EMV and PCI DSS will continue to be an important consideration after making the move to the new payment method,” BillingTree said.

3. Tokenization

In explaining what BillingTree described as “the combat fraud king,” Visa chief executive officer Charles Scharf recently told attendees at the Bank of America Merrill Lynch 2014 Banking & Financial Services Conference that tokenization is “the single biggest change that’s been made in payment networks easily over the past 15 or 20 years.”

With the emergence of new payment options such as EMV and mobile, BillingTree contends there will be fresh concerns about fraud prevention.

“But tokenization is the combat fraud king, covering a range of payment channels targeted by fraudsters – card present, card not present and mobile,” BillingTree said. “2015 will see big players like Visa and MasterCard pushing their tokenization services to payment processors of all sizes — incorporating a range of emerging payment methods.”

4. Goodbye Passwords. Hello Biometrics?

BillingTree acknowledged iris scanners and fingerprint readers might seem more suited to espionage movies than the payment processing industry. But if Visa and MasterCard have their way, BillingTree said both could soon become commonplace.

“These innovative technologies are known as biometrics. Plans are in place for current online authentication systems such as MasterCard SecureCode and Verified by Visa to possibly be phased out in the near future,” BillingTree said.

FTC Says 2 Dealer Groups Broke Consent Orders


The Federal Trade Commission penalized a pair of dealership groups for violations of a previous consent order regarding advertising the cost of buying or leasing a vehicle.

Part of the consent orders established in March 2012 indicated FTC officials could inspect any advertising material distributed by Billion Auto — a chain of 20 family-owned dealerships in Iowa, Montana and South Dakota, and a family-controlled advertising company, Nichols Media — as well as Ramey Motors and three affiliated dealerships in Virginia and West Virginia.

Last week, the agency announced that Billion Auto and Ramey Motors violated of those FTC administrative orders, which prohibit the dealerships from “deceptively” marketing elements to making a vehicle purchase such as down payments and annual percentage rates.

FTC officials said Billion Auto and Nichols Media have agreed to settle charges that they violated a 2012 FTC administrative order. That order prohibits Billion Auto, and any companies in active participation with it, from misrepresenting material costs and terms of vehicle finance and lease offers and requires specific disclosures, mandated by the Truth in Lending Act (TILA) and Regulation Z, and the Consumer Leasing Act (CLA) and Regulation M.

The Billion Auto defendants agreed to pay $360,000 in civil penalties to settle the FTC’s charges.

According to the complaint against Billion and Nichols, the dealerships and advertising company violated the 2012 FTC administrative order by frequently focusing on only a few attractive terms in their ads while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery.

“For example, some dealership ads promoted low monthly payments or attractive annual percentage rates and finance periods, while concealing other material items, such as low payments were for leases, not sales,” FTC officials said. “Major limits existed on who could qualify for discounts, and offers often included significant added costs.”

In a separate action seeking civil penalties, the FTC charged Ramey Motors with violating a similar 2012 FTC administrative order.

Among other things, the FTC contends Ramey Motors’ ads allegedly misrepresented the costs of financing or leasing a vehicle by concealing important terms of the offer, such as a requirement to make a substantial down payment.

The complaint also charges Ramey Motors with failing to make credit disclosures clearly and conspicuously, as required by the TILA. The FTC also alleges that the dealer group failed to retain and produce appropriate records to the commission to substantiate its offers.

Ramey Motors and its affiliates are subject to $16,000 in civil penalties for each alleged violation of the FTC administrative order.

The FTC vote to refer the Billion complaint and proposed stipulated order to the Department of Justice for filing was 5-0. The Justice Department filed the complaint and proposed stipulated order on behalf of the FTC in the U.S. District Court for the Northern District of Iowa last Thursday.

The FTC vote to authorize filing the complaint against Ramey Motors was 5-0. It was filed in the U.S. District Court for the Southern District of West Virginia last Thursday.

“If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.”

Consent Order Background

Back in March 2012, Billion Auto and Ramey Motors and three other dealerships agreed to FTC settlement orders that require them to stop running ads in which they promise to pay off a consumer's trade-in no matter what the consumer owes on the vehicle.

The consent order associated with both Billion Auto and Ramey Motors indicated an “advertisement” shall mean a commercial message in any medium that directly or indirectly promotes a consumer transaction.

The FTC insisted that those ads contain “clearly and conspicuously” elements, with five associated mandates:

— In a print advertisement, the disclosure shall be in a type size, location, and in print that contrasts with the background against which it appears, sufficient for an ordinary consumer to notice, read, and comprehend it.

— In an electronic medium, an audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. A video disclosure shall be of a size and shade and appear on the screen for a duration and in a location sufficient for an ordinary consumer to read and comprehend it.

— In a television or video advertisement, an audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. A video disclosure shall be of a size and shade, and appear on the screen for a duration, and in a location, sufficient for an ordinary consumer to read and comprehend it.

— In a radio advertisement, the disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it.

— In all advertisements, the disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or promotion.

Furthermore, the consent order mandated the stores stop two other practices regarding trades, including:

— Misrepresent that when a consumer trades in a used vehicle in order to purchase another vehicle, the dealer will pay any remaining loan balance on the trade-in vehicle such that the consumer will have no remaining obligation for any amount of that loan.

— Misrepresent any material fact regarding the cost and terms of financing or leasing any newly purchased vehicle.

Report: 6 Finance Companies Subpoenaed in NY


Regulatory investigations of auto finance companies are piling up as now reportedly the New York Department of Financial Services is joining the fray.

An online report citing an anonymous source indicated New York state’s financial services regulator subpoenaed the captive arms of Ford, Honda, Nissan and Volkswagen as well as Santander and TD Bank.

A person familiar with the matter told Reuters late on Thursday the developments are part of a probe of possible consumer abuses in subprime auto lending.

The report went on to note the investigation by the New York Department of Financial Services probe includes potentially discriminatory practices.

This latest development comes on the heels of the Consumer Financial Protection Bureau and the U.S. Department of Justice sending notification of potential penalties against the captive arms of Toyota and Honda. SubPrime Auto Finance News first reported about Toyota acknowledging in a filing with the Securities and Exchange Commission along with Honda sharing similar news a few days later.

Reuters’ report added the Department of Justice also is investng the auto finance processes at General Motors Financial.

This week’s reported actions by the New York Department of Financial Services isn’t the first time this state regulator turned its attention to the auto finance industry.

Back in May, DFS obtained a restraining order again Condor Capital Corp., a subprime auto lender headquartered on Long Island, and its owner, Stephen Baron. Officials said a DFS investigation uncovered that allegedly Condor has engaged in a longstanding scheme to steal millions of dollars from its customers — among other unfair, abusive, and deceptive practices.

AFSA Identifies 7 Objections with CFPB Rule Proposal


Among the seven specific objections the American Financial Services Association made known to the Consumer Financial Protection Bureau, the organization concluded the threshold to determine what regulators consider to be a larger participant in auto financing should be raised significantly.

To recap, if a finance company makes, acquires or refinances 10,000 or more vehicle loans or leases in a year, the CFPB is looking to become that operation’s primary regulator stemming from a proposal disclosed during a bureau event back in September. This week, which was the end of the CFPB’s period for accepting public comment, the Structured Finance Industry Group joined AFSA in declaring the participation level should be lifted to 50,000.

“In order to avoid creating further regulatory burdens, uncertainty and potential restriction of access to credit for auto loans, the CFPB should make several changes to the proposed rule,” AFSA executive vice president Bill Himpler said in the comment letter to the CFPB that also was signed by Structured Finance Industry Group executive director Richard Johns.

“AFSA agrees with the bureau regarding the important role that automobiles and auto-related financing play in consumers’ lives, and in the country as a whole,” Himpler continued. “With this in mind, it is crucial that the CFPB exercise great care in crafting the final rule defining larger participants in the automobile financing market to avoid creating further regulatory burdens, minimize uncertainty for covered persons in that market, and potentially restrict consumers’ access to credit for these loans.”

Himpler then articulated the seven specific rule modifications for the CFPB to consider, including:

— Use the Regulation Z definition of “refinancing” as opposed to the proposed expanded definition.

— Retain the exclusion for asset-backed securities from the definition of “annual originations” and modify the exclusion to clearly cover asset-backed securities.

— Refrain from overreach regarding leases.

— Modify the test used to determine larger participants to ensure that it truly captures the “larger” participants who actually occupy the vast majority of the market.

— Change certain other definitions, including what is an automobile, a title loan and an affiliate.

— Provide additional detail on Experian Automotive’s AutoCount database and specifically exclude loans not made for the purpose of financing the purchase of automobiles or the refinancing of such original obligations from the database.

— Revisit the cost likely to be incurred by a larger participant experiencing supervisory activities by the bureau.

When Himpler elaborated about each of those seven recommendations, the AFSA officials shared some examples that might be of particular interest to finance company leaders. First, Himpler pointed out how the CFPB’s current metrics and definitions could place certain entities into two very different categories simultaneously.

“A threshold of 10,000, coupled with the overly broad definition of refinancing, is so low that covered persons who qualify as small businesses under the Small Business Administration’s definition could also qualify as larger participants under the proposed rule. If the definition of refinancing is not changed, even more small businesses have the potential to meet the definition of larger participant,” Himpler said.

“It seems contradictory that a covered person could be a small business and a larger participant at the same time,” he continued. “A small business that has less than $38.5 million in average annual receipts without question does not have more than 1 percent of the $900 billion automobile financing market share.

“It stretches credulity to conclude that such a small business with less than 1 percent of the market share should be considered a ‘larger’ participant in the entire market,” Himpler went on to say.

Himpler also touched on the CFPB’s expectations for what maintaining compliance is going to cost finance companies. The CFPB estimated total labor cost for an examination is about $27,611, requiring only a low-level compliance officer and a small fraction of an attorney’s fees.

However, Himpler said he reviewed CFPB statements and exam manuals. AFSA now believes the bureau expects a compliance officer that is a corporate executive with direct access to the finance company’s board.

“The salary for such a person would be much higher,” Himpler said. “Additionally, from what members of the industry have learned from their counterparts in other industries, a CFPB examination requires ‘all hands on board’ plus substantial outside counsel costs.”

Himpler mentioned several other resources finance companies might need, such as a number of in-house attorneys, business persons, IT professionals, outside counsel and outside consultants who could be directly involved with CFPB examinations.

So bottom line — how much might an examination cost?

“We believe, based on exam costs from companies in other industries, that a more accurate estimate for the cost of an examination would be $750,000 to $1 million,” Himpler said. “Larger and lengthier examinations can cost over $1 million in staff time and outside counsel and consultants.

“To be clear, this is independent of costs associated with the conclusion of memos of understanding or consent orders,” he continued. "The estimate in the proposed rule also totally ignores other costs, such as e-discovery, costs which are often astronomical.

“For a small business with $38.5 million or less in average annual receipts — even a half-a-million-dollar exam is a huge cost,” Himpler went on to say.

AFSA’s complete commentary to the CFPB can be downloaded here.

Reynolds & RouteOne Partner to Enhance eContracting Possibilities

DAYTON, Ohio - 

Reynolds and Reynolds and RouteOne reached a new agreement on Monday to integrate RouteOne’s eContracting system with Reynolds’ docuPAD software, which can provide dealerships with the capability to capture electronic signatures for vehicle financing eContracts directly from docuPAD workstations and send them to RouteOne.

Previously, the companies explained F&I managers switched between applications and technology to sign RouteOne contracts and other related documents.  This new functionality between docuPAD and RouteOne can eliminate a cumbersome process and allow F&I managers to execute contracts and other ancillary funding documents in one place, integrated with the entire vehicle sales process in docuPAD.

“Signing RouteOne eContracts along with vehicle funding package documents on a docuPAD screen allows for a smoother eContracting process in the dealership’s F&I office,” said Jon Strawsburg, vice president of product planning at Reynolds.

“The new integration streamlines the electronic signature process and helps ensure better accuracy and compliance tracking,” Strawsburg continued. “It also will provide a more consistent experience for consumers and a more transparent interaction, both of which can lead to better customer satisfaction.”

Reynolds’ docuPAD is an interactive, flat screen F&I selling tool that can engage consumers and enable F&I managers to work more productively.  docuPAD can offer touch screen features that range from personalized menus and video presentations to e-signature capture for contracts and disclosure documents.  docuPAD is part of the Reynolds Retail Management System for dealerships and is protected by a number of U.S. patents.

RouteOne is a provider of automobile financing system solutions for dealerships and finance sources. Its eContracting solution can speed the funding process, reduces errors through automated contract data validation and improves the overall consumer experience. It is an integral part of the RouteOne platform that also includes credit applications, online retail services, compliance tools and open integration.

“We’re pleased to extend our relationship with Reynolds by integrating the RouteOne eContracting system with docuPAD, which will enable dealers to electronically transmit funding package documents from docuPAD to RouteOne, eliminating the need to fax them,” RouteOne chief executive officer Mike Jurecki said.

“RouteOne’s goal has always been to provide a seamless, complete solution to accommodate the F&I process for dealers and lenders, and the new integration with docuPAD helps both RouteOne and our customers move closer to that goal,” Jurecki went on to say.

AIADA Chairman: The Truth About the CFPB


For more than a year, the Consumer Financial Protection Bureau, an unelected government agency tasked with regulating the consumer finance market, has doggedly pursued what it views as “disparities” in auto lending. On this issue, you have to respect their determination: They’ve let nothing stand in their way, including lack of evidence.

It came as no surprise, then, when earlier this week the CFPB finally formally accused Honda and Toyota of discriminatory loan practices. Honda confirmed that the CFPB is seeking, “monetary relief and implementation of changes to our discretionary pricing practices and policies.” More automakers could be named in the coming weeks.

Both Toyota and Honda are working with the federal government to achieve a resolution. I imagine they will ultimately pay a fine and agree to refine portions of their pricing practices. Perhaps they will even be forced to switch to flat fees, thereby punishing well-qualified consumers by denying them access to lower rates. Automakers know, just like the rest of us, that when the United States government paints a target on your back, the best thing to do is cooperate. It’s just too bad that in this case the automakers already share the CFPB’s commitment to fair lending.

Auto lending in the U.S. is a fair and well-organized process. How do I know? Well, for one thing, I’m a dealer who writes thousands of loans every year to satisfied customers. For another, I’ve seen the recent study by the American Financial Services Association (AFSA) that found the CFPB’s approach to identify loan discrepancies was deeply flawed. For example, the methodology they used to classify loan applicants as African-American borrowers was correct just 24 percent of the time.

You can check out the full study here, and be amazed, like me, that the CFPB continues to push this argument despite their astounding lack of reliable data.

There are a number of ways the CFPB could make a difference in the lives of American consumers. One of the first would be to increase opportunities for, and access to, comprehensive financial education for all Americans. Unfortunately, instead they have chosen to focus on and unfairly attack a single industry, perhaps enjoying the chance to see themselves righting social injustice in the nation’s headlines.

And why let truth stand in the way of an opportunity like that?

Larry Kull is the AIADA (American International Automotive Dealers Association) chairman. See this post and more at the Chairman’s Blog.

Reynolds & CATA Partner to Create Illinois F&I Library

DAYTON, Ohio - 

Reynolds and Reynolds announced this week that Reynolds Document Services has partnered with the Chicago Automobile Trade Association (CATA) to launch the Reynolds LAW Illinois F&I Library, a comprehensive catalog of standardized, legally reviewed finance and insurance (F&I) documents that can be used by dealers who are CATA members.

The LAW Illinois F&I Library of documents was created and will be maintained by the combined expertise of Reynolds director of compliance and Used Car Week panelist Terry O’Loughlin, Reynolds’ AFIP certified compliance legal specialists and the CATA.

“We’re pleased to partner with CATA to offer a Reynolds LAW brand forms library to new car dealers throughout the Chicago area,” said Jerry Kirwan, senior vice president and general manager of Reynolds Document Services.

“The documents included in the LAW F&I Library are proven and trusted tools to help dealers meet compliance standards, improve business efficiency, lower risk and improve the car-buying experience for their customers,” Kirwan continued.

The Chicago Automobile Trade Association is one of the oldest and largest metropolitan franchised dealer associations in the U.S., listing more than 400 dealers as members.

“We’re continually looking for products and services that help new car dealers and their customers achieve a more efficient, effective and pleasing end-to-end automobile retailing experience,” CATA president Dave Sloan said.

“Working with Reynolds on the creation of a LAW Illinois forms library is one set of tools we can offer CATA member new car dealers to do just that,” Sloan added.

Reynolds Document Services offers similar LAW brand forms libraries to dealers in a number of states, including California, Ohio, Pennsylvania, Virginia and West Virginia.

AFSA Supports Trade Association Petition on TCPA


The American Financial Services Association recently sent a letter to the Federal Communications Commission, again stressing what officials called the need for more sensible rules implementing the Telephone Consumer Protection Act (TCPA).

AFSA insisted that penalties of up to $1,500 per violation of the TCPA have provided plaintiffs’ attorneys with “fodder” for lawsuits that “enrich the attorneys rather than compensate their clients.”

Associated officials highlighted the letter supported a petition filed by the Consumer Bankers Association (CBA). CBA’s petition asks the FCC to clarify that “called party,” for the purposes of the TCPA, refers to the intended recipient of the call.

“By confirming that intended recipients are called parties, the FCC will not only stem the tide of frivolous TCPA litigation, but also will prevent potential chilling of beneficial consumer communication, shield consumers from higher costs stemming from increased litigation and allow small businesses to grow,” AFSA said.