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 on Tuesday, 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.

AHFC officials added that they also have been informed that the agencies may defer pursuit of this litigation if the captive “works with the agencies to seek a voluntary resolution to these allegations.

“The agencies have informed AHFC that they are seeking monetary relief and implementation of changes to AHFC’s pricing practices and policies, which changes could affect AHFC’s business,” the company said in its SEC filing signed by Paul Honda, the captive’s vice president and assistant secretary.

“AHFC intends to continue to cooperate with the agencies to find a mutually agreeable resolution,” Honda added.

Just like Toyota’s captive arm, American Honda Finance indicated that it was previously contacted by the CFPB and DOJ regarding the agencies’ review of pricing practices by dealers originating retail installment sale contracts for vehicles.

“Their request for information and the ongoing review was to determine if pricing practices of dealers originating retail installment sale contracts for automobiles resulted in discriminatory pricing of these loans to certain borrowers in violation of applicable laws,” Honda’s captive said. “AHFC has voluntarily provided the information requested to date and cooperated with the agencies’ investigation.”

And just like Toyota Motor Credit, American Honda Finance currently is one of the top 20 market share holders. According to third-quarter data from Experian Automotive, AHFC ranked No. 7, holding 2.54 percent of the market.

Furthermore, Honda is extremely active in the leasing market as Experian indicated three of the automakers models — the Civic, Accord and CRV — led the way in market share for the most new-vehicle leases in Q3.

SubPrime Auto Finance News recapped Toyota’s letter acknowledgement earlier this week.

Hudson Cook Hosting Free Webinar on Debt Collection


Hudson Cook is keeping a watchful eye on a pair of developments regarding debt collections and the regulatory impact on finance companies.

The firm indicated the Consumer Financial Protection Bureau and the Federal Trade Commission filed several enforcement actions relating to debt collection and the notice of proposed rulemaking on debt collection practices is expected shortly. In light of those developments, Hudson Cook is hosting a free webinar to explain what the potential impact could be.

The Hudson Cook partners set to be a part of the hour-long webinar that’s scheduled for 1 p.m. ET on Dec. 15 are:

— Lucy Morris, recent deputy enforcement director in the division of supervision, enforcement, and fair lending at the Consumer Financial Protection Bureau

— Joel Winston, former associate director of the FTC’s division of financial practices

— Barbara Sinsley, who is considered one of the nation’s leading attorneys on debt sales and collection practices.

The panel will be moderated by Gary Becker, former chief executive officer and general counsel of DCM Services who now is a Hudson Cook partner

“Those attending the webinar will learn about the recent enforcement actions and projected rulemaking related to debt collection,” Hudson Cook said. “The panel of experts will provide insight into enforcement actions and their implications for the debt collection industry.”

Finance company managers and debt collection staff members can register for the free webinar here.

2 More F&I Vets Pass Difficult AFIP Tests


An owner of an industry service provider as well as a veteran dealership manager recently achieved great success in examinations orchestrated by the Association of Finance & Insurance Professionals.

Joining the ranks of a handful of professionals who have advanced to the second round of AFIP’s Master Certification Program is Michael Tuno, founder and president of World Class Dealer Services (WCDS).

Tuno first attained master status two years ago when AFIP introduced the top-level curriculum in 2012.

“Compliance has always been at the core of WCDS products and services,” Tuno said. “Master certification helps me provide our dealer clients not only with a better understanding of the rules, but also best practices in the evolving regulatory environment.”

 Tuno founded WCDS, based in Quakertown, Pa., in 2003. The full-service agency provides finance and insurance products and resources to automotive, recreational vehicle, powersport and heavy truck dealers in the mid-Atlantic region.

Before WCDS, Tuno gained 18 years of experience in F&I. He logged six years in retail sales, F&I and sales management; three years in automotive banking; nine years in sales and management with Universal Underwriters Group; and one year as vice president franchise sales with the Guardian Warranty Corp. before launching his own company.

Tuno has contributed to numerous trade publication articles and has been a speaker and panelist at national conventions. He was an instructor for F&I with the NADA Automobile Dealer Candidate Academy and currently serves as an instructor for F&I with the NADA American Truck Dealer Candidate Academy.

Tuno earned his initial AFIP certification in 1996 and his senior certification in 2009.

“Michael Tuno is a leader in the field of F&I,”, AFIP executive director David Robertson said. “It’s fitting that he’s in the first wave of second-tier masters – they are the vanguard of their profession. Their commitment to excellence and ethical conduct embody what it means to be a true professional.”

Meanwhile, Justin Gasman, finance director for McCaddon Cadillac Buick GMC in Boulder, Colo. passed the AFIP Master Certification Exam with high marks.

Gasman has 11 years of industry experience. He began apprenticing in F&I during his first job as a salesman with Fisher Chevrolet Honda Pontiac in Boulder. After a year, he was promoted to F&I manager and later moved up to the finance director position.

When the dealership transitioned in 2009 to Fisher Honda Kia, he served the organization as both finance director and Kia sales manager.

Gasman joined the McCaddon organization in January. The family-owned dealership, in operation since 1958, sells and services all makes and models of Cadillac, Buick and GMC vehicles.

The dalerships' president, Mark McCaddon said, “In today’s extreme regulatory and consumer-protective environment, the training and competency of F&I professionals is important to the entire operation. We are proud and delighted that Justin has reached the very highest level of proficiency in this position, and congratulate him for achieving master level status with the Association of Finance & Insurance Professionals.

“His willingness to train and test to this level is a benefit to our customers, the entire dealership organization — and to the industry as a whole,” McCaddon added.

 Gasman became AFIP certified in 2006 and earned senior certification in 2008.

“AFIP certification reflects my commitment to my craft — and shows customers that we are doing business legally, ethically and professionally,” Gasman said.

And Robertson added, “Justin’s commitment to his profession and high level of execution truly embody the spirit of what it means to be a Master Certified Professional in Financial Services.”

94 Graduates Complete Consumer Credit Compliance Program


At the same venue as Used Car Week, the National Automotive Finance Association awarded its Certified Consumer Credit Compliance Professional designation to its first graduating class following the completion of more than 24 hours of classroom training and 29 Web-based sessions.

The certification program was developed for the NAF Association by Hudson Cook and made possible by the financial support of the founding and sustaining sponsors.

The opening round of the program attracted students from banks and finance companies, dealers, device manufacturers and attorneys.

“We developed this challenging curriculum for those working in the auto finance industry to provide participants a valuable working knowledge of today's federal and state consumer financial services and compliance requirements, said Eric Johnson, Hudson Cook partner and co-curriculum developer and instructor.

“Those completing the program will be at the forefront of compliance preparation and training for themselves and the companies they represent,” Johnson continued.

Module 4 of the certification program was held in Las Vegas at the Red Rock Casino, Resort and Spa in conjunction with the SubPrime Forum.

The program's final module had 94 of the 141 enrolled program participants in attendance. Having completed this final stage of the program and all the required testing,  the participants are now recognized as Certified Consumer Credit Compliance Professionals.

“The NAF Association has made a significant investment in this compliance program to assist the industry in facing the increasing regulatory requirements,” NAF Association executive director Jack Tracey said.

“The program was built to provide the best compliance education available,” Tracey continued.

Tracey went on to point out that Certified Consumer Credit Compliance Professionals become an important part of a company's compliance management system, demonstrating to regulators that a company's compliance staff has been able to meet the stringent requirements necessary to complete this program.

“The program offers great insight to the application of all consumer compliance regulations,” said program graduate Tony Myers of Regions Financial Corp.

The NAF Association is offering an opportunity to enroll in the program's next class which is being offered on Jan. 8 and 9 in Atlanta.

For information on the program curriculum and registration, visit

And for more information on the Consumer Credit Compliance Certification Program contact Tracey at (410) 865-5431 or


700Credit Offers Free Compliance Webinar on Thursday

TORRANCE, Calif.  - 

700Credit is hosting a free webinar on Thursday that aims to answer many questions on dealers’ minds when it comes to compliance.

The Adverse Action, Red Flag and Risk-Based Pricing compliance webinar, titled Dealer Knowledge Webinar: Compliance Questions Answered, is scheduled for 2 p.m. (ET) to 3 p.m. on Thursday. The company said it is meant to be informational, data-driven and designed to tackle these compliance challenges dealers face under new regulations:

  • How to manage adverse action obligations
  • Adhering to risk-based pricing regulation guidelines
  • Crafting an Identity Theft Prevention Program and solutions for Red Flag regulations

The company said space is limited and encourages prompt registration, which can be done here:

700Credit also listed several system requirements, as shown below:

  • PC-based attendees: Required — Windows 8, 7, Vista, XP or 2003 Server
  • Mac-based attendees: Required — Mac OS X 10.6 or newer
  • Mobile attendees: Required — iPhone, iPad, Android phone or Android tablet

Automotive Credit joins Wolters Kluwer Financial Services’ AppOne Platform


Wolters Kluwer Financial Services announced Monday that Automotive Credit Corp., a Midwest-based provider of subprime financing solutions, joined the AppOne platform.

The companies explained AppOne can help to automate the credit approval and compliance processes for finance companies and the dealerships in their networks.

This integration can provide Automotive Credit with access to the AppOne network of independent dealers as well as Wolters Kluwer Financial Services’ network of Bankers Systems motor vehicle retail installment contracts, which can help ensure loan documentation is accurate and compliant.

“Compliance requirements are a real challenge for dealerships.  This is a significant new tool in our efforts to help alleviate the burdens of complicated F&I functions so they can focus their energy on meeting the needs of their customers,” said Jeff Glaser, vice president of sales and marketing with Automotive Credit.

“The new platform not only simplifies the loan origination process, but it also helps build relationships with more dealers,” Glaser continued.

Brad Fleener, senior director and general manager of indirect lending at Wolters Kluwer Financial Services, added, “We are committed to helping lenders and dealerships in the sub-prime auto financing marketplace ease compliance-related challenges and grow their business.

“Automotive Credit Corporation has a strong reputation for its dedication to serving the sub-prime auto financing needs of dealers and clients, and we are excited to help support their efforts so they can continue to grow safely and profitably,” Fleener went on to say.

For more information, visit

BillingTree to Highlight Collection Compliance in Next Free Webinar


BillingTree announced the next webinar in its series titled, Payment & Technology Spotlight Series — Technology and Innovation for the Digital Age.

With the upcoming segment putting the spotlight on compliance, BillingTree highlighted the free session will feature a virtual panel discussion by a group of leading industry professionals who will share their unique experiences and perspectives on major compliance topics which have an effect on any organization that falls under the Consumer Financial Protection Bureau’s oversight including collection agencies, lenders, auto financiers and credit unions.

The panel, which includes Charity Olson, managing attorney with the Olson Law Group and Jennifer Philips, financial services director with Ontario Systems Compliance Consulting, will hold in depth discussion on subjects such as Regulation E, the E-Sign Act and Convenience Fees.

Audience questions and participation are encouraged during the 60-minute live session.

The live webinar will take place on Nov. 18 at 1 p.m. ET, and participation is free of charge for industry professionals.

To register for this event, visit this website

The Payment & Technology Spotlight Series is sponsored by BillingTree and was launched earlier this year with complimentary webinars including “Interactive Voice Response — Utilizing IVR Technology to Drive Agency Growth” and the “Three Virtual Virtues: Agents, Negotiation & Settlement.” Recordings of both session are available for replay upon request.

Companies interested in contributing to a future event in the Payment & Technology Spotlight Series can email

NAF Association Schedules Next Opener to Consumer Credit Compliance Certification Program


While the first cohort will be completing the training at the same location as next month’s Used Car Week, the National Automotive Finance Association is now beginning enrollment for its next group of professionals who are looking to complete the Consumer Credit Compliance Certification Program.

NAF Association officials announced the first module of the program will be conducted on Jan. 8 and 9 at the Atlanta Airport Marriott in Atlanta.

After the day and a half of classroom-style learning in Atlanta for Module No. 1, participants will move onto the 29 self-paced Web-based sessions covering federal and state laws and regulations that govern the auto financing business. Successful testing throughout the program is necessary before progressing in the program.

The certification of Compliance Professional awarded upon completion of Module No. 4, a live classroom session covering the Consumer Financial Protection Bureau.

The NAF Association opened the program earlier this year and is on tap to close the first round of curriculum with that fourth module at the Red Rock Casino, Resort and Spa in Las Vegas, also the site of Used Car Week that begins on Nov. 10.

NAF Association executive director Jack Tracey explained why the compliance training is so important for finance companies to consider nowadays.

“A critical part of a compliance management system is staffing it with qualified compliance personnel,” Tracey said. “A company having their compliance officer(s) certified through a comprehensive educational program is a clear demonstration of the importance the organization places on compliance.”

 This program is available to the staff of NAF Association member companies at the price of $2,000 per person and non-member companies at $2,600 per person.

Tracey noted registration rates for non-member companies are increasing. After Dec. 1, the cost for staff of non-member companies will be $3000.

“Register early to reserve your spot and avoid the registration increase,” Tracey said.

Executives and managers can complete the registration process by going to this website.

CFPB Finalizes New Privacy Disclosure Rule


This week, the Consumer Financial Protection Bureau finalized a rule to promote more effective privacy disclosures from financial institutions to their customers. The new rule, which was proposed in May, allows companies that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually. 

“Consumers need clear and accessible information about how their personal information is being used in the marketplace, but some of these requirements were redundant,” CFPB director Richard Cordray said. “Posting privacy notices online will make it easier for consumers to access these important policies, while also making it cheaper for financial institutions to provide disclosures.”

Officials recapped the Gramm-Leach-Bliley Act (GLBA) generally requires that financial institutions send annual privacy notices to customers. These notices must describe whether and how the financial institution shares consumers’ nonpublic personal information.

If the institution does share this information with an unaffiliated third party, it typically must notify consumers of their right to opt out of the sharing and inform them of how to do so.

Under the CFPB’s new rule, the bureau explained financial institutions will be able to post privacy notices online instead of distributing an annual paper copy, if they satisfy certain conditions such as not sharing data in ways that would trigger consumers’ opt-out rights.

Officials added the new rule applies to both banks and those nonbanks that are within the CFPB’s jurisdiction under the GLBA such as auto finance companies and institutions that offer vehicle financing. Institutions that choose to rely on this new method of delivering privacy notices will be required to use the model disclosure form developed by federal regulatory agencies in 2009.

Under the new rule, the CFPB indicated that if an institution qualifies for and wants to rely on the online disclosure method, it will have to inform consumers annually about the availability of the disclosures. Previously, institutions were required to send consumers a separate communication about privacy disclosures.

The bureau noted the new rule allows institutions to include a notice on a regular consumer communication, such as a monthly billing statement for a credit card, letting consumers know that the annual privacy notice is available online and in paper by request at a provided telephone number.

If an institution chooses not to use the new disclosure method, it will need to continue to deliver annual privacy notices to its customers using other delivery methods, according to the CFPB.

Officials went on to highlight the benefits of the new rule include:

• Constant access to privacy policies: Previously, consumers would receive a copy of their financial institution’s privacy policies once per year. If financial institutions choose the new alternative delivery method, consumers will be able to view their institution’s privacy policies at any time, while still receiving notices through existing delivery methods if the policies’ terms change. The online privacy notices will not require a login to view. For those customers with limited or no internet access, financial institutions will have to mail annual notices within 10 days to customers who request them by phone. 

• Limited data sharing: If an institution shares data with unaffiliated third parties in a way that triggers customers’ rights to opt out of such sharing, then that institution generally would not be allowed to use the alternative delivery method. For this reason, financial institutions have an incentive to limit their sharing to reduce their costs.

• Educating consumers: When financial institutions post their privacy policies on their websites using the new delivery method, they must use the model disclosure form designed by federal regulators. The model disclosure form allows consumers who are concerned about their personal information to easily understand their financial institution’s privacy policy. Consumers can thus better educate themselves about the various types of privacy policies.

• Cheaper for companies to notify consumers of privacy practices: The CFPB anticipates that the rule will reduce the cost for companies to provide annual privacy notices. The Bureau estimates that about $17 million could be saved by the industry annually if institutions choose the new online disclosure method.

The bureau is finalizing the rule largely as it was proposed in May, with a number of technical, clarifying, and minor revisions. The rule will be effective immediately upon publication in the Federal Register.

The final rule is available here.

5 Ways Dealers Can Enhance Data Security


As more major retailers are being hacked for consumer information, Dealertrack Technologies made five recommendations to help dealerships protect themselves, their customers, store data and ultimately, profitability.

Among the five steps shared by Sharon Kitzman, vice president and general manager of DMS for Dealertrack, were:

— Create privacy notices that address the sharing of data.

— Carefully vet and contractually bind partners to confidentiality and specified, limited use of dealer data.

— Limit partner access to only those data modules required for them to perform the contracted-for services.

— Reserve the right to restrict access to data as your business needs change.

— Terminate access to your dealer data immediately at the end of a relationship.

“The combination of smart technology and smart data sharing and security practices is your best defense against lost or stolen customer and dealer data,” Kitzman said in a blog post on the company’s website. “By demonstrating to customers that you can practically and confidently protect their information, it will go a long way in winning their confidence and future business.”

Kitzman emphasized these practices are important because some partners may claim that they need to own or have irrevocable license to dealer data. 

“Others may want to hide what data they are pulling and how they are using it, and many charge exorbitant amounts to integrate your data — data that belongs to you — into their systems,” Kitzman said.

“The bottom line is that you need to inspect your own dealership’s data practices to ensure that your technology partners are doing only what you approve,” she went on to say.

Kitzman’s colleague from Dealertrack — Michael Collins — likely will be talking about data security and more during his afternoon keynote presentation at the SubPrime Forum, the Used Car Week segment dedicated to the financing side of the business.

Collins, Dealertrack’s senior vice president of F&I solutions, will be asking the question, “Is today’s subprime market the ‘new normal?” Collins will deliver a unique perspective on how the subprime market has helped to fuel the auto industry’s recent success. He will deliver trends seen in both used-vehicle and subprime financing, share insights of how the in-store to online financing process has begun to transform the way consumers conduct their vehicle purchase, and also review what is in store for 2015. 

Collins’ presentation is one of the many highlights of the SubPrime Forum, an event orchestrated in partnership with the National Automotive Finance Association.

This three-day conference will provide data, knowledge, insight and powerful business networking opportunities to spur innovation and drive growth in the growing subprime auto finance marketplace. Presented by SubPrime Auto Finance News and, and in affiliation with the NAF Association, the event will offer a best-in-class forum for executives and thought-leaders in the auto finance vertical.

The SubPrime Forum is set for Nov. 10 through Nov. 12 at the Red Rock Casino, Resort and Spa in Las Vegas. It’s a part of Used Car Week, which includes the CPO Forum, the Re3 Conference and the National Remarketing Conference.

All member-company staff of the NAF Association are $100 eligible for a discount of off the standard registration fee for the SubPrime Forum. Use discount code NAF2014 when registering.

Also, be sure to make your hotel reservations at the Red Rock Casino, Resort and Spa before Oct. 17 to secure your room at the exclusive conference rate of $195/night.

Click here for additional information regarding the SubPrime Forum, including the agenda, scheduled speakers and exhibitors.