Compliance

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.

FTC reinforces auto industry enforcement priorities

WASHINGTON, D.C. - 

Coinciding with the regulator offering a deeper explanation of its revamped Used Car Rule, Tom Pahl of the Federal Trade Commission made the opening presentation during the National Policy Conference, hosted this week by the National Independent Automobile Dealers Association.

Pahl covered a variety of topics during his 45-minute opportunity behind the lectern at the Dupont Circle Hotel, located less than a test drive distance away from the White House and Capitol Hill. Pahl told nearly 200 dealers, service providers and other industry representatives that working with organizations such as NIADA is beneficial to helping consumers understand the intricacies of acquiring and financing a vehicle.

Pahl also recapped some of the most recent FTC actions. What might be a thorn for dealers and finance companies, Pahl noted that the regulator is trying to make civil investigative demands “more streamlined” and “more transparent of what info we’re seeking.”

Reinforcing the assessment of compliance expert Randy Henrick, who described the situation in more detail here, Pahl also mentioned how the FTC is continuing to watch dealer advertising closely when it comes to stores promoting financing options. Many FTC investigations are connected to “truthful statements in advertising to consumers,” according to Pahl, who back in February was appointed as acting director of the FTC’s Bureau of Consumer Protection.

While certainly busy, Pahl went on to point out that the FTC likely won’t be highly active in rule making, rather focusing on regulations already in place.

Pahl urged dealers and finance companies to leverage the guidance available on the FTC’s website as a path to making business decisions that are compliance with the regulator’s mandates. Another example is what the FTC just delivered in response to a request from the National Automobile Dealers Association.

The legal team at Hudson Cook highlighted that the FTC issued a guidance document answering certain frequently asked questions about the revised Used Car Rule and the revised Buyers Guide.

The material that’s available here explained that the 2016 amendments don’t change the essential requirements of the Used Car Rule. The regulator insisted the changes include certain revisions to the Buyers Guide to give consumers more information and to make it easier for dealers to disclose manufacturer and third-party warranties. Here is a summary of what’s new:

—The revised Buyers Guide recommends that consumers get a vehicle history report before buying a used car and sends them to ftc.gov/usedcars for more information on how to get one.

—The revised Buyers Guide directs consumers that before buying a vehicle, they should visit safercar.gov to check for safety recalls.

—There’s a new description in the revised Buyers Guide of an “As Is” sale to clarify that “As Is” refers only to whether the vehicle is offered with a warranty from the dealer.

—The revised Buyers Guide adds boxes dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available.

—The revised Buyers Guide adds a box dealers can check to indicate that an unexpired manufacturer’s warranty applies.

—The new English-language version of the Buyers Guide adds a statement in Spanish advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish.

—On the back of the revised Buyers Guide, air bags and catalytic converters have been added to the list of major defects that may occur in used vehicles.

3 more reports question CFPB’s actions and structure

WASHINGTON, D.C. - 

Recent projects completed by the Competitive Enterprise Institute and the Cato Institute again delved into unsatisfactory assessments of the Consumer Financial Protection Bureau.

Coinciding with House Republicans chastising the CFPB over its investigation of Wells Fargo, a wide-sweeping survey conducted by the Cato Institute found that participants agree with an assertion previously made by the Consumer Bankers Association — that the bureau should be run by a commission rather than a single director.

According to a blog post by Emily Ekins, a research fellow and director of polling at the Cato Institute, Americans support changing the structure of the CFPB as nearly two-thirds (63 percent) say the CFPB should be led by a bipartisan commission of Democrats and Republicans, rather than by a single director. A third (33 percent) think a single director should run the federal agency instead.

Ekins noted that support is post-partisan with strong majorities of Democrats (67 percent) and Republicans (64 percent) in support of a bipartisan commission leading the agency.

Notably, Ekins went on to mention majorities of Americans support a bipartisan commission leading the CFPB regardless of whether one has a positive opinion (55 percent) or negative opinion (63 percent) of the agency.

Beyond how the CFPB leadership is structured, the Cato Institute 2017 Financial Regulation Survey showed that support for CFPB independence is more controversial than changing its structure.

Ekins shared that 54 percent of Americans say Congress should have limited oversight of the CFPB and should not set its budget, while 42 percent say Congress should closely oversee and set the budget for the agency.

Moreover, Ekins added that partisans disagree about the level of oversight needed for this federal agency. Reluctance for more Congressional oversight is perhaps unsurprising given that only 7 percent of Americans have a lot of confidence in Congress to run things.

Bottom line: the Cato Institute asked 2,000 Americans 18 years of age and older between May 24 and 31 this simple question. Has the CFPB achieved its mission?

From its inception, Ekins insisted that the bureau has been tasked with making it easier for consumers to understand the terms and conditions of credit cards and other financial products. However, six years into the agency’s tenure, she reported that few Americans (26 percent, to be exact) believe the CFPB has achieved its mission to make financial products’ terms and conditions clearer.

That survey sentiment coincided with analysis presented by the Competitive Enterprise Institute (CEI). Its report documented what the firm described as the harm inflicted on ordinary consumers of financial products by the bureau that remains unaccountable to Congress, the president and the courts.

The report available here urges Congress to make drastic reforms to the CFPB or even abolish it.

“The Consumer Financial Protection Bureau was set up under the Dodd-Frank act of 2010 in violation of constitutional norms ostensibly to protect consumers from bad actors in the banking and financial services industry, but the agency is instead actively harming consumers, pressing ahead with regulations even when the benefit to consumers is likely to be outweighed by the costs,” said Iain Murray, vice president for strategy at CEI and author of the report titled, “The Case against the Consumer Financial Protection Bureau: Unconstitutionally Structured and Harmful to Consumers.”

Murray added, “The CFPB would be far less able to abuse its power and make bad decisions if it were held accountable. It’s urgent that Congress take action to stop the CFPB and restore constitutional checks and balances aimed at protecting Americans from abuses of government power.”

Each effort by the Cato Institute and the Competitive Enterprise Institute arrived as the House Financial Services Committee released a second interim staff report on its investigation into the Wells Fargo fraudulent account scandal and the CFPB enforcement action on the matter.

An internal CFPB “Recommendation Memorandum” for the director — improperly withheld from the committee for more than a year according to lawmakers — revealed the bureau failed to fully and adequately investigate Wells Fargo.  Instead, the report said the bureau rushed to settle with Wells Fargo for less than 1 percent of the CFPB’ss own estimate of the bank’s statutory civil monetary penalty. 

Not only does the Recommendation Memorandum fail to justify the CFPB’s settlement, the report said the document calls into question the accuracy of CFPB director Richard Cordray’s testimony before Congress and his claims that the bureau had conducted an “independent and comprehensive investigation.”

“The CFPB’s handling of this matter and its refusal to fully comply with the Congressional subpoena are a slap in the face to millions of Americans who were harmed by Wells Fargo and further evidence of the CFPB’s unaccountable structure and leadership.  The premature suspension of its investigation means that the CFPB also potentially lost the opportunity to discover recently revealed instances of further consumer harm,” committee chairman Jeb Hensarling said.

How repossession practices could improve based on latest CFPB report

WASHINGTON, D.C. - 

Hudson Cook partner Allen Denson read through the auto-finance portion of the latest Supervisory Highlights shared by the Consumer Financial Protection Bureau and immediately thought of another credit segment. The CFPB’s report described problems bureau representatives found with vehicles being repossessed after contract holders evidently made catch-up payments or entered into agreements to avoid repossession.

In the report, the CFPB acknowledged that contract holders give creditors a security interest in their vehicles. When a borrower defaults, the CFPB said a creditor can exercise its rights under the contract and repossess the secured vehicle.

The bureau also pointed out that servicers may have formal extension agreements that allow borrowers to forbear payments for a certain period of time or may cancel a repossession order once a borrower makes a payment.

“In one or more recent exams, examiners found that one or more entities were repossessing vehicles after the repossession was supposed to be cancelled,” the CFPB said in the report. “In these instances, the servicer(s) wrongfully coded the account as remaining delinquent, customer service representatives did not timely cancel the repossession order after borrowers made sufficient payments or entered an agreement with the servicer to avoid repossession, or repossession agents had not checked the documentation before repossessing and thus did not learn that the repossession had been cancelled.

“Bureau examiners concluded that it was an unfair practice to repossess vehicles where borrowers had brought the account current, entered an agreement with the servicer to avoid repossession, or made a payment sufficient to stop the repossession, where reasonably practicable given the timing of the borrower’s action,” the report continued.

Upon reviewing that update, Denson arrived at this assessment.

“The problems with repossession highlighted in the most-recent version of the CFPB’s Supervisory Highlights are reminiscent of financial regulators concerns about alleged wrongful foreclosures during the mortgage crises,” Denson said in a message to SubPrime Auto Finance News. “There, mortgage servicers on occasion foreclosed on consumers who were involved in loan modification or workout pipelines. 

“The same circumstances appear to apply here: Consumers may have had their vehicles repossessed while they were part of a workout agreement,” continued Denson, who is set to be a part of a regulatory discussion during Repo Con at Used Car Week, which begins on Nov. 13 in Palm Springs, Calif.

After the CFPB discovered what the regulator deemed to be an improper practice, the bureau’s report shared what happened next.

“Supervision directed the servicer(s) to stop the practice,” the report said. “In response to our examiners’ findings, the servicer(s) informed supervision that the affected consumers were refunded the repossession fees.

“The servicer(s) also implemented a system that requires repossession agents to verify that the repossession order is still active immediately prior to repossessing the vehicle, for example, through a specially designed mobile application for that purpose,” the report added.

Upon seeing how the CFPB handled the matter, Denson closed with an upbeat recommendation of how the auto finance industry can move forward to avoid these problems down the road.

“The Supervisory Highlights, while noting the problem, also seem to contain a proposed solution,” Denson said. “Servicers should develop methods to ensure real-time or near real time status updates of accounts before repossession and should develop procedures whereby repossession agents confirm that a repossession should occur immediately prior to the event. 

“In the case of the servicer highlighted in Supervisory Highlights, a ‘high-tech’ solution in the form of an app was adopted,” he continued. “However, services could adopt more manual procedures as well. The key is having open information channels and checks against alleged wrongful repossessions.”

New York governor and AG take aggressive actions over Equifax breach

NEW YORK - 

Two of the highest ranking officials in New York are using the Equifax security breach to intensify actions within the Empire State, bringing Experian and TransUnion into the matter, too.

On Tuesday, Gov. Andrew Cuomo directed the New York Department of Financial Services to issue new regulation making credit reporting agencies register with New York for the first time and comply with what the state has called a first-in-the-nation cybersecurity standard.

Then on Wednesday, New York Attorney General Eric Schneiderman announced that his office has sent formal inquiries regarding data security to Experian and TransUnion following the Equifax data breach that potentially exposed the personal information of 143 million consumers.

“A person’s credit history affects virtually every part of their lives, and we will not sit idle by while New Yorkers remain unprotected from cyberattacks due to lax security,” Cuomo said.

“The Equifax breach has left millions of New Yorkers vulnerable to identity theft and major financial issues,” Schneiderman said. “Credit reporting agencies have a fundamental responsibility to protect the personal information they’re entrusted with.

“As we continue our investigation into the Equifax breach, it’s vital to ensure that consumer data at the other major credit reporting agencies is safe,” Schneiderman added.

Under the proposed regulation, all consumer credit reporting agencies that operate in New York must register annually with DFS beginning on or before Feb. 1 and by Feb. 1 of each successive year for the calendar year thereafter. The registration form must include an agency’s officers or directors who will be responsible for compliance with the financial services, banking, and insurance laws and regulations.

The annual reporting obligation contained within the proposal also provides the DFS Superintendent with the authority to deny and potentially revoke a consumer credit reporting agency's authorization to do business with New York’s regulated financial institutions and consumers if the agency is found to be out of compliance with certain prohibited practices, including engaging in unfair, deceptive or predatory practices.

“The data breach at Equifax demonstrates the necessity of strong state regulation like New York’s first-in-the-nation cybersecurity actions,” Department of Financial Services superintendent Maria Vullo said. “This is one necessary action of several that DFS will take to protect New York's markets, consumers and sensitive information from criminals.”

The DFS Superintendent may refuse to renew a consumer credit reporting agency's registration if the superintendent finds that the applicant or any member, principal, officer or director of the applicant, is not trustworthy and competent to act as or in connection with a consumer credit reporting agency, or that the agency has given cause for revocation or suspension of such registration, or has failed to comply with any minimum standard.

The proposed regulation also subjects consumer reporting agencies to examinations by DFS as often as the superintendent determines is necessary, and prohibits agencies from the following:

—Directly or indirectly employing any scheme, device or artifice to defraud or mislead a consumer.

—Engaging in any unfair, deceptive or predatory act or practice toward any consumer or misrepresent or omit any material information in connection with the assembly, evaluation, or maintenance of a credit report for a consumer located in New York State.

—Engaging in any unfair, deceptive, or abusive act or practice in violation of section 1036 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

—Including inaccurate information in any consumer report relating to a consumer located in New York State.

—Refusing to communicate with an authorized representative of a consumer located in New York State who provides a written authorization signed by the consumer, provided that the consumer credit reporting agency may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the consumer.

—Making any false statement or make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the superintendent or another governmental agency.

In addition, every credit reporting agency must comply with the department’s cybersecurity regulation, on phased in schedule of compliance, starting April 4.

DFS’ cybersecurity regulation requires banks, insurance companies and other financial services institutions regulated by DFS to have a cybersecurity program designed to protect consumers' private data; a written policy or policies that are approved by the board or a senior officer; a chief information security officer to help protect data and systems; and controls and plans in place to help ensure the safety and soundness of New York's financial services industry.

“Oversight of credit reporting agencies will help ensure that personal information is less vulnerable to cyberattacks and other nefarious acts in this rapidly changing digital world,” Cuomo said. “The Equifax breach was a wakeup call and with this action New York is raising the bar for consumer protections that we hope will be replicated across the nation.”

And Schneiderman wants to know what Experian and TransUnion are doing, as well.

In letters sent to the CEOs of the two companies, the attorney general’s office asks them to detail:

—The security measures that were in place before they learned of the Equifax breach

—Steps the companies have taken since learning of the breach to ensure that they haven’t already suffered similar intrusions and won’t experience breaches moving forward

—How they will further assist consumers in protecting their personal information

Schneiderman is seeking the answers to these questions by Sept. 21 and a meeting with top executives at Experian and TransUnion by Sept. 28.

CitiFinancial Credit to pay DOJ $907K for SCRA violations during repossessions

WASHINGTON, D.C. - 

A suit involving vehicle repossessions and members of the military came to a close Monday.

The Justice Department announced that CitiFinancial Credit Co., as successor to CitiFinancial Auto Corp., has agreed to pay $907,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 164 vehicle owned by SCRA-protected servicemembers without first obtaining the required court orders.

During the investigation, DOJ officials said they learned that CitiFinancial conducted repossessions without court orders even when CitiFinancial had evidence in its own records suggesting that a borrower could be a protected servicemember. In several cases, loan servicing notes indicated that CitiFinancial was informed that the borrower was in military service or had received orders to report for military service.

The Justice Department said that CitiFinancial, nevertheless, continued repossession efforts and eventually succeeded in repossessing the servicemembers’ vehicles.

This settlement resolves a suit filed by the department in the Northern District of Texas and covers vehicle repossessions that occurred between 2007 and 2010. CitiFinancial Auto Corp. originated and serviced these vehicle installment contracts until 2010, when operations and assets were sold to Santander Consumer USA.

In February 2015, the Justice Department entered a settlement with Santander that provides servicemembers with more than $10.5 million in compensation for repossessions that violated the SCRA. As part of the investigation of Santander’s repossession practices, officials learned that CitiFinancial sold Santander the right to collect debts owed by servicemembers after their vehicles had been repossessed by CitiFinancial in violation of the SCRA.

The SCRA protects servicemembers against certain civil proceedings, including vehicle repossessions, affecting their legal rights during active military service. The SCRA 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 then 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 vehicles owned by protected servicemembers, the DOJ asserted that CitiFinancial prevented servicemembers from obtaining a court review of whether these repossessions should be delayed or adjusted to account for their military service.

Officials went on to mention this agreement further compensates servicemembers for their losses by requiring CitiFinancial to pay $5,000 to each impacted servicemember, in addition to the Santander settlement.

CitiFinancial must also pay $10,000 to one affected servicemember who did not receive partial compensation through the Santander settlement.

In addition, CitiFinancial will pay $500 per account to compensate borrowers for any lost equity, with interest, and must take steps to repair the credit of all affected servicemembers. An independent settlement administrator will contact servicemembers in the coming months to finalize individual settlements at no cost to the servicemembers.

“Members of our armed forces make extraordinary sacrifices in order to protect and defend our nation, and they should be able to serve actively without fear that their legal rights will be violated,” said Associate Attorney General Rachel  Brand. “This settlement provides financial relief and credit repair assistance to the servicemembers whose vehicles were repossessed by CitiFinancial.

“The enforcement of federal laws protecting current members of the Armed Services, veterans, and their families continues to be an important priority for this Department of Justice,” Brand continued.

“The men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us,” U.S. Attorney John Parker added. “This conduct clearly fell short of that and I'm grateful we were able to repair some of that harm.”

DIMONT launches complimentary claims consulting service for storm recovery

DALLAS - 

DIMONT is deploying DANA to help the auto-finance industry handle the ramifications of Hurricanes Harvey and Irma.

DANA — which is DIMONT Associates Nationwide Adjusters — now is available with a team ready to provide claims management guidance to finance companies and servicers in the aftermath of these storms and beyond.

DIMONT explained DANA is a virtual resource center that can allow finance companies and service providers the ability to email questions or schedule a live chat with a licensed adjuster. The tool is available indefinitely and is not limited to DIMONT clients.

DIMONT’s adjusters will, at a minimum, help servicers evaluate whether properties are in flood zones, what types of coverages apply and, most critically, how to navigate the exclusions, endorsements and exceptions in the applicable policy.

“People often assume that coverage automatically applies, but that is not the case,” DIMONT chief executive officer Denis Brosnan said. “The terms and conditions of policies vary greatly by the carrier and, as such must be carefully scrutinized.

“We wanted to provide the auto and mortgage industries a simple resource to get their questions answered on filing claims, addressing refuted claims, claim type, customer service — basically anything they need,” Brosnan continued.

“DANA offers a complimentary phone consultation with our expert licensed public adjusters, who can help navigate claims processing during this uncertain time,” he went on to say.

DANA is available now at www.dimont.com/dana. DIMONT also is set to be one of the exhibitors during Used Car Week, which begins Nov. 13 in Palm Springs. Calif.

NADA offers strategy to handle Equifax concerns

TYSONS, Va. - 

The National Automobile Dealers Association cautioned store managers and personnel that they’re likely to see two trends surface with regard to the Equifax security breach as customers arrive in the showroom or service drive.

Mark Scarpelli, who is the 2017 NADA chairman, specified the two probable scenarios in a blog post the association shared last Friday. Scarpelli mentioned dealerships are likely to get questions from customers about the breach itself as well as a potential increase in credit freezes and fraud alerts on credit applicants’ credit reports.

“Equifax has stated that information from as many as 143 million people in the United States was compromised,” wrote Scarpelli, who is president of Raymond Chevrolet and Raymond Kia in Antioch, Ill., and co-owner of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, Ill.

“Given the number of people affected and the sensitive type of information exposed, dealers should understand the basics of the breach and what it means for their customers,” he continued.

“If dealership personnel do get questions, it is important to first explain that the reported breach occurred at Equifax, and does not involve the dealership, data stored at the dealership or dealership processes,” Scarpelli went on to state.

Scarpelli suggested that dealerships should review guidance provided by the Federal Trade Commission regarding the Equifax matter. He also recommended that the FTC’s guidance can be even more help if F&I office personnel spot a fraud alert or encounter a frozen credit report.

“Dealers and their employees should also be aware that there are already scammers trying to take further advantage of the Equifax breach by calling consumers and trying to obtain personal information through false pretenses,” Scarpelli wrote.

The NADA chairman closed by touching on one other compliance element the Equifax incident might give dealerships a chance to re-examine.

“Lastly, this is a good reminder for dealers to revisit their Red Flags program to ensure that they are taking the required steps to detect and prevent scammers from opening a line of credit using someone else’s information,” he wrote in the blog post here.

CoreLane debuts cloud-based tool to connect DMS and LOS systems

ORANGE, Calif. - 

CoreLane Technologies, a provider of innovative transactional connectivity solutions for automotive dealers and finance companies, on Monday announced the launch of CreditLane, a low-cost, scalable cloud-based platform for delivering data between dealers and finance companies.

CoreLane will debut the new platform this week at the defi SOLUTIONS Annual Client Summit in Las Colinas, Texas.

CoreLane explained the CreditLane platform can integrate with the dealer management system (DMS) and the finance company’s loan origination system (LOS), enabling the implementation of the system without the need for extensive training.

CreditLane receives contract information directly from the dealer’s DMS and transmits it to finance company, eliminating the possibility of keystroke errors caused by entering information multiple times. The finance company instantly receives the application through its LOS and responds with a decision that generates an alert and messages on the dealer’s DMS. 

The final deal structure is pushed back into the dealer’s DMS, reducing errors and streamlining funding.

CreditLane also enables finance companies to grow their portfolios by providing them visibility to a broad array of dealers. The CreditLane Lender Directory can provide marketing information to prospective dealers so finance companies can easily identify, connect and submit applications to CreditLane providers.

 “Since transitioning to the CreditLane platform, we have seen a positive impact on our ability to streamline our process and improve communication. The functionality of having real time updates between dealers and our origination departments has significantly reduced the time between receiving an application and being able to approve and fund the deal,” said Vic Amin, senior vice president of sales and marketing at Veros Credit. 

“The efficiencies we’ve gained make every interaction faster and easier, which in turn, has helped to reduce our overall operating costs,” Amin continued.

 “We also wanted a solution that could accommodate our continued growth, and the CreditLane platform gives us the necessary customization and scalability to maximize productivity at a pace that we set,” Amin went on to say.

Bill Medved, senior vice president of technology and operations of CoreLane, is confident other finance companies can achieve the same benefit as what Veros Credit has experienced.

“We’ve spent over a year researching how dealers and lenders currently submit and process applications,” Medved said. “Based on the result of that research, we’ve partnered with multiple DMS providers and integrated with defi SOLUTIONS to develop CreditLane. 

“We look to partner with all key industry stakeholders to provide solutions that are ‘one-click simple,’” he went on to say.

As mentioned, CoreLane will be pushing out its new tool during defi SOLUTIONS’ event — defi FEST — at the NYLO hotel in Las Colinas, Texas, beginning on Tuesday.

During the event, defi SOLUTIONS will share company and product insights and information, and encourage collaboration through discussions and idea-sharing. The defi SOLUTIONS business model centers around collaboration, and this annual round-up of clients, partners and company team members is an opportunity to make certain everyone is benefitting from defi relationships and the defi lending platform of services.

 “This year we’re offering more sessions and topics of interest to our clients,” said Kartheek Veeravalli, defi’s chief product officer. “We’ve grown quickly, so we’ll also take this opportunity to make sure our clients are aware of the latest and greatest services our auto lending platform has to offer, such as Auto Structuring.”

An entire session will be devoted to the defi auto loan origination system (LOS) Auto Structuring capability, which automatically structures counter-offers according to a client’s individually customized credit policy rules. Other defi SOLUTIONS sessions include the Q&A company and product roadmap with chief executive officer Stephanie Alsbrooks and others from the defi executive team, two-way texting in loan management and servicing, the need for speed in current systems and architecture, as well as a presentation from defi chief operating officer Georgine Muntz on the use of technology in competitive strategy.

Additionally, defi partners will be presenting ‘bottom-line’ benefits case studies.

“Our sponsors are an integral part of this event,” said Patty Jefferson, defi SOLUTIONS vendor relationship manager. “defi clients won’t want to miss out on their interactive roundtable sessions.”

Digital Matrix System (DMS) is the event’s Big Kahuna sponsor. Other partners include AUL, Black Book, Cedar Document Technologies, Clarity Services, Corelane Technologies, Dealertrack, eOriginal, Equifax, FactorTrust, Hatteras, Kelley Blue Book, LexisNexis Risk Solutions, Open Lending, REPAY, RouteOne, Solutions by Text and TransUnion.

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