Compliance Archives | Page 30 of 61 | Auto Remarketing

GWC Warranty rolls out free compliance training for top dealer clients

Used-vehicle service contract and related finance and insurance products provider GWC Warranty introduced a new exclusive benefit for its top dealers. Members of the WealthBuilder and Elite Dealer Programs now have access to free, online, on-demand compliance training.

Through GWC Warranty’s Dealer Portal, WealthBuilder and Elite Dealers can access an online compliance training platform. The suite of tools and training is available in an intuitive, easy-to-use interface that is accessible 24/7 with modules dedicated to F&I personnel.

“Dozens of major federal regulations create a time-consuming, confusing and potentially costly environment for automotive dealers who do not have adequate training resources available to them,” said GWC Warranty chief executive officer and president Rob Glander said in a news release posted on Monday.

“It is our hope that offering compliance training to our top dealers will allow them to spend fewer hours navigating complicated regulations and more time doing what they love — selling cars,” Glander continued.

In addition to the free compliance program available to all WealthBuilder and Elite Dealers, GWC Warranty is also offering two optional upgrade packages at discounted rates.

WealthBuilder and Elite Dealers interested in signing up for compliance training should contact their GWC Warranty Dealer Consultants to get started. Dealers interested in partnering with GWC Warranty can visit www.GWCWarranty.com/dealers to learn more.

CFPB’s supervisory highlights focus on credit reporting

The Consumer Financial Protection Bureau (CFPB) recently released a report detailing the problems in the credit reporting industry that the bureau said it has uncovered and corrected through its oversight work. Since launching its supervision of the credit reporting market, the CFPB has identified significant issues with the quality of the credit information being provided by furnishers and maintained by credit reporting companies.

The report outlines the actions that the CFPB has taken to address these ongoing problems, such as fixing data accuracy at credit reporting companies, repairing the broken dispute process and cleaning up information being reported.

“Since we began our oversight work, the CFPB has been uncovering and correcting problems in the consumer reporting industry,” CFPB director Richard Cordray said. “Because of our work, important improvements are being made. Much more work needs to be done but our corrective actions are leading to positive changes that are benefiting consumers all over the country.”

The CFPB maintained that consumer reporting companies are businesses that track information about a consumer, including credit history, deposit account history and other consumer transactions. The agency insisted such companies, which include what are popularly called credit bureaus or credit reporting companies or agencies, play a key role in the consumer financial services marketplace and in the financial lives of consumers.

For example, officials pointed out the reports sold by the three largest consumer reporting companies — Equifax, Experian and TransUnion — are used in determining everything from consumer eligibility for credit to the rates consumers pay for credit. The consumer reporting companies receive their information from furnishers, including both banks and nonbanks.

“Inaccurate information can lead to inaccurate reports, and consumer and market harm,” the CFPB said.

Consumers continue to complain about the credit reporting industry in high numbers. The bureau has handled approximately 185,700 credit reporting complaints as of Feb. 1.

“Consumers have said that when they dispute an item on their report, nothing changes even though federal law requires the consumer reporting company to conduct a reasonable reinvestigation and update the file to reflect any necessary changes or delete the item,” the bureau said.

“Consumers also frequently complain of debts already paid showing up on their report as unpaid and information that is not theirs being included in their report negatively affecting their credit scores,” the regulator added.

In 2012, the CFPB became the first federal agency to supervise all sides of the credit reporting market, which includes the consumer reporting companies and providers of consumer financial products or services, many of whom furnish or use consumer reports. In 2013, the CFPB published a bulletin warning that the agency would hold furnishers accountable for their legal obligation to investigate consumer disputes forwarded by the consumer reporting companies. The bulletin also reminded companies that they must review all relevant information provided with the disputes, including documents submitted by consumers.

The CFPB added that it has also made efforts to educate the public about the importance of checking their credit reports, what to look for in their reports, and how to dispute mistakes. As outlined in its special edition of Supervisory Highlights, because of these widespread issues, CFPB supervision has aimed its work at:

—Fixing data accuracy at consumer reporting companies: Early on, examiners found that one or more of the consumer reporting companies lacked good quality control to check the accuracy of their consumer records. The CFPB directed them to make necessary changes, and they did.

In recent exams, examiners have found that quality control programs have been instituted that include tests to identify whether reports are produced for the wrong consumer and whether reports contain mixed-up files. The companies are also taking better corrective actions when mistakes are identified, and making system improvements to prevent the same mistakes from happening again.

—Repairing broken dispute processes at consumer reporting companies: CFPB examiners discovered that one or more consumer reporting companies were not following federal requirements that said they must send a notice with the results of disputes to consumers. They also found one or more consumer reporting companies failing to consider documentation provided by the consumer on a disputed item.

The CFPB directed these companies to improve their dispute investigation systems. Now, continued monitoring has shown that the consumer reporting companies have improved processes for investigating disputes and are improving response letters to consumers.

—Cleaning up information from furnishers: Through earlier reviews at banks and nonbanks, CFPB examiners found widespread problems with furnishers supplying incorrect information to the consumer reporting companies. The CFPB directed them to take steps to address these problems, such as maintaining evidence that they are accurately handling disputes and conducting reasonable investigations.

Since then, the bureau indicated several furnishers have dedicated more resources to ensuring the integrity of the information. This effort includes better investigations and handling of disputes, notifying consumers of results, and taking corrective action when inaccurate information has been supplied. Importantly, though, examiners continue to find numerous violations at one or more furnishers, particularly around deposit account information.

The CFPB went on to mention its approach when examining the credit reporting activities of supervised entities is just like its approach to examining other activities of supervised entities. Supervision includes a review of compliance systems and procedures, on-site examinations, discussions with relevant personnel and requirements to produce relevant reports. The Fair Credit Reporting Act governs how companies handle consumers’ information.

When examiners find violations of law, they direct the companies to change their conduct and remediate consumers. When appropriate, the CFPB’s supervisory activity also results in enforcement actions, such as the action against the furnisher Wells Fargo Bank for failing to update or correct inaccurate, negative information reported to credit reporting companies about student loans.

The latest edition of the CFPB's Supervisory Highlights that focus on credit reporting is available here. 

FTC and New York AG release annual auto-related complaint stats

Coinciding with the start of National Consumer Protection Week, both the Federal Trade Commission and New York attorney general Eric Schneiderman — one of the most active individual regulatory enforcers in the auto finance space — both released annual consumer compliant figures associated with their respective agencies.

While complaints associated with auto financing made the national regulator’s list of 10 top categories, auto-related complaints received by the FTC’s Consumer Sentinel Network in 2016 registered only a fraction of the overall figures generated by activities associated with categories such as debt collection, imposter scams and identify theft.

The FTC reported that it received 94,673 auto-related complaints last year, constituting 3 percent of the annual figure. The agency defines auto-related complaints as “Misleading or deceptive claims regarding auto prices, financing, leasing or warranties; repair\maintenance issues with newly purchased used or new cars, including dissatisfaction with service provided by auto mechanics; price fixing and price gouging concerns against gas stations and oil companies; etc.”

Last year, the FTC said it received 103,768 auto-related complaints and 95,039 auto-related complaints in 2014.

The regulator went on to say imposter scam complaints surpassed identity theft for the first time as the second most common category of consumer complaints, according to the agency’s new Data Book.

Although debt collection complaints declined slightly between 2015 and 2016, the FTC indicated they remained the top consumer complaint category, comprising 28 percent of all complaints. Officials determined the high number of reported debt collection complaints was due in part to complaints submitted by a data contributor who collects complaints via a mobile app.

The FTC contends the rise in impostor scam reports is due to an increase in complaints about government imposters. Officials explained imposter scams come in many varieties, but work the same way: a scammer pretends to be someone trustworthy, such as a government official or computer technician to convince a consumer to send money.

Imposter scams also topped the list of complaints from military consumers followed by identity theft complaints, according to the FTC.

The regulator noticed identity theft complaints declined from 16 percent in 2015 to 13 percent in 2016, with 29 percent of 2016 consumers reporting that their data was used to commit tax fraud. Officials added there was a jump in those consumers who reported that their stolen data was used for credit card fraud; this figure rose from nearly 16 percent in 2015 to more than 32 percent in 2016.

“Our latest data book shows that imposter scams are a serious and growing problem, and you can be sure that the FTC will use all the tools at its disposal to address it,” said Thomas Pahl, acting director of the FTC’s Bureau of Consumer Protection. “That includes law enforcement actions against scammers and consumer education to help consumers avoid losing money.”

The most widely reported method of payment (58 percent) for those who reported losing money to fraud was a wire transfer. Of those who noted in their fraud complaint how they were first contacted, 77 percent said it was by phone.

In 2016, the Consumer Sentinel Network collected more than 3.1 million consumer complaints, which the FTC has sorted into 30 top complaint categories. As with 2015, Florida, Georgia and Michigan were the top three states for fraud and other complaints, while Michigan, Florida and Delaware were the top three states for identity theft complaints.

The complaint categories making up the top 10 are:

The FTC produces the Consumer Sentinel Network Data Book annually using complaints received by the Consumer Sentinel Network. These include complaints made directly by consumers to the FTC, as well as complaints received by state and federal law enforcement agencies, national consumer protection organizations, and 2non-governmental organizations.

The Data Book includes national statistics, as well as a state-by-state listing of top complaint categories in each state and a listing of metropolitan areas that generated the most complaints per capita.

The Consumer Sentinel Network’s secure online database is currently available to more than 2,300 individual users in civil and criminal law enforcement agencies across the country and abroad. Agencies use the data to research cases, identify victims and track possible targets. Although non-governmental organizations may contribute data to the database, only law enforcement agencies can access the database.

New York complaint data

Meanwhile in the Empire State, Schneiderman’s office reported that complaints about automobile sales, service, financing and repairs ranked second on the attorney general’s annual rundown, totaling 3,437. Officials explained many of the vehicle-related complaints were filed by Volkswagen consumers after Schneiderman announced an investigation into Volkswagen’s installation of software devices that caused its diesel vehicles to cheat environmental pollution tests.

The office participated in an interrelated series of partial settlements with Volkswagen and its Audi and Porsche affiliates that provided unprecedented relief, including enabling over 21,500 New York vehicle owners to sell their models back to the companies at pre-scandal, fair market value, plus receive a cash payment of at least $5,100.

Furthermore, Schneiderman highlighted that this year marks the 30th anniversary of New York’s New and Used Car Lemon Laws, which provide a legal remedy for buyers or lessees of new vehicles that turn out to be lemons. The arbitration program was extended to used vehicles three years after being introduced.

“You may be entitled to a full refund if your car does not conform to the terms of the written warranty and the manufacturer or its authorized dealer is unable to repair the car after a reasonable number of attempts,” Schneiderman’s office said. “The law allows consumers to shop around for the best deal when leasing a car, set limits on early termination, and gives the attorney general’s office jurisdiction to resolve excess wear-and-tear disputes.”

Since 1987, the attorney general’s office reported more than 30,000 new-model applications were filed resulting in more than 20,000 dispositions through either an arbitration award or a settlement. The 30-year total recoveries to consumers from the new-vehicle program are estimated to be in excess of $245 million and an estimated excess of $39 million from the used-vehicle program.

For the 11th year in a row, Internet-related complaints topped the annual list with 4,605 complaints received by Schneiderman’s office last year.

“This serves as a reminder: Fraudsters are always looking for ways to line their pockets at the expense of unsuspecting consumers,” Schneiderman said. “The best weapon against scams is an informed consumer — and the law. I encourage New Yorkers to report fraud, and my office will continue its long tradition of vigorously enforcing New York’s strong consumer protection laws.”

3 components of Trump demands for regulator task forces

President Trump took aim again at government regulation with the executive order he signed on Friday. The latest action is requiring every agency to establish a regulatory reform task force “to eliminate red tape,” according to the White House.

The administration explained this executive order contains three main components, including:

— Each regulatory reform task force will evaluate existing regulations and identify candidates for repeal or modification.

— Each agency’s task force will focus on eliminating costly and unnecessary regulations.

— To hold the task forces accountable, agencies will measure and report progress in achieving the president’s directives.

“This executive order directs each agency to establish a regulatory reform task force, which will ensure that every agency has a team of dedicated — and a real team of dedicated people to research all regulations that are unnecessary, burdensome and harmful to the economy, and therefore harmful to the creation of jobs and business,” Trump said in remarks during the signing.

“Each task force will make recommendations to repeal or simplify existing regulations,” he continued. “The regulatory burden is for the people behind me and for the great companies of this country, and for small companies — an impossible situation, we’re going to solve it very quickly. They will also have to really report every once in a while to us so we can report on the progress, and so we can come up with some even better solutions.”

Trump went on to note that regulation need only clear one hurdle.

“Every regulation should have to pass a simple test: Does it make life better or safer for American workers or consumers?  If the answer is no, we will be getting rid of it and getting rid of it quickly,” the president said.

“We will stop punishing companies for doing business in the United States. It’s going to be absolutely just the opposite. They’re going to be incentivized for doing business in the United States,” Trump added.

Video from the executive order signing can be seen here or at the top of this page.

2 experts examine CFPB appeals court matter

Two legal experts told SubPrime Auto Finance News that they were not surprised when the U.S. Court of Appeals for the District of Columbia Circuit last week granted a rehearing request for a case involving the Consumer Financial Protection Bureau.

Still, both Hudson Cook chairman Michael Benoit and Terry O’Loughlin, who is the director of compliance for Reynolds Document Solutions, described how noteworthy the next development will be when oral arguments before the en banc court will be heard on May 24.

“I am not surprised even though it is relatively unusual for cases to be heard en banc,” O’Loughlin said. “It is not favored since convening a full panel of active judges consumes a considerable amount of time and resources of the court. It is reserved where there may be a conflict in rulings, to establish uniformity, or the proceeding involves a question of exceptional importance. In this case it clearly is the latter.

“This case involves a significant constitutional issue: can an independent agency exercising substantial authority be headed by a single person?  It has never happened,” he continued. “But there are also other conflicts of law, such as the status of administrative judges, which needs to be addressed.”   

The entire matter stems from a case in which the initial decision reached last October called the CFPB “unconstitutionally structured.” The case pit the regulator against PHH Corp., a Mount Laurel, N.J.-based finance company that operates in the mortgage space.

It involved a three-judge panel of the court, which ruled the CFPB’s structure was constitutionally flawed and that its director, who currently is Richard Cordray, should be removable at the will of the president.

Both Benoit and O’Loughlin pointed out that the Dodd-Frank Act currently stipulates that the director may only be removed “for cause.” In granting the petition asked for by the CFPB, Benoit noted the court ordered that the three-judge panel’s ruling last October be vacated.

“When you request a rehearing en banc, it’s rehearing of the same case in the same court so the original decision goes away. It’s vacated because they’re not reviewing their own decision,” Benoit said.

“Because they got the hearing en banc, that wipes out the decision. It’s like it never happened. They’re going to start over and hear it again,” Benoit added.

The appeals court also said it is asking case participants to answer these questions:

— Is the CFPB’s structure as a single-director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?

— May the court appropriately avoid deciding that constitutional question given the panel's ruling on the statutory issues in this case?

— If the en banc court concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?

“The fundamental rule of judicial restraint is that prior to reaching any constitutional questions, federal courts must consider non-constitutional grounds for decision.  These questions are an attempt to avoid the larger constitutional issue regarding whether Richard Cordray, and the organization of the CFPB, are unconstitutionally organized. These are intriguing questions,” said O’Loughlin, who spent more than a dozen years with the Florida attorney general’s office before joining Reynolds and Reynolds.

Benoit is one of the closest watchers of CFPB developments within the Hudson Cook legal team so he called the move coming out of the appellate court “a pretty big deal.”

He continued by saying, “It is very interesting because this is a unique situation where we have an agency that’s referred to in a statute as an executive agency but then it has a single director who can’t be fired at will by the president. In every other executive agency, the president can fire the appointed leaders who work at the pleasure of the president.

“The CFPB functionally operates as an independent agency and historically independent agencies have been led by commissions rather than a single person,” Benoit said. “The rationale behind that is that these are politically balanced commissions so that when you have a change in administration or a change in leadership, you don’t have these wild swings in policy and interpretation of the law. You don’t have the see-saw effect that I think will be something we see from the CFPB when Richard Cordray is ultimately replaced or until we move to a commission structure.”

SubPrime Auto Finance News asked Benoit and O’Loughlin to project what might happen when the rehearing occurs in May and what finance companies should do in the meantime.

“If I had to look in my crystal ball, I would think that they would still rule in favor of PHH, but they’ll do it on statutory grounds and not on constitutional grounds,” Benoit said.

O’Loughlin added, “Until the court renders a decision, it is business as usual with the CFPB since the original judgment was vacated. In other words, the CFPB’s authority remains intact for now. 

“Finally, it wouldn’t be surprising if this case ultimately is heard by the Supreme Court, since the en banc decision is likely to be appealed regardless of the result,” O’Loughlin went on to say.

EFG leverages industry veteran & technology to launch new dealer compliance training series

Steve Roennau’s automotive career includes time as a training consultant for nearly a half dozen OEMs — Chrysler, General Motors, Ford, Mitsubishi and Hyundai. Roennau’s professional life also includes tenures in important roles at a dealership such as salesperson, used-car manager, new-car manager and F&I manager.

With that much experience and a knack for public speaking, EFG Companies made Roennau the centerpiece for what being dubbed its Common Sense Compliance platform. Officially launched on Wednesday, EFG highlighted that its Common Sense Compliance platform was designed to ease the challenges facing dealers and take the difficulty out of compliance by presenting the principles of compliance in an easy-to-understand manner, using layperson language with practical recommendations.

Roennau, who is vice president of compliance at EFG, explained during a conversation with SubPrime Auto Finance News that the Common Sense Compliance platform consists of three primary components:

1. Monthly podcasts featuring Roennau and discussions with industry experts, dealership principals, general managers and F&I managers on immediate, simple steps that dealers can take to significantly impact their compliance standards.

2. A video series with short, informational clips that dealers can share with their teams to make their compliance efforts more effective.

3. An ongoing compliance initiative for EFG clients that includes in-depth training, dealership assessments, and performance analysis.

Roennau acknowledged how precious the time is that stores allow for meetings and training sessions with their staffs

“Compliance is a big elephant if you’re trying to look at all of it all at once,” he said. “It helps a lot to break it down, make it those easy to digest, smaller bites for people. I think the audience appreciates that. They want it when they need it.

“A lot of times, they don’t have hours to do this,” continued Roennau, who holds certifications from the National Automotive Finance Association and the Association of Finance & Insurance Professionals.

“A lot of these managers, whether it’s an F&I manager or a sales manager, they’re going to have meetings with their staffs and people," he added. "They need to cover compliance as well as numerous other things in an effective way. Some of these videos and tips can assist with that. That can bring up, it plays for a minute and they can discuss anything around it that is pertinent to their dealership and move on to the rest of the business.

“It keeps compliance in front of them but it doesn’t drag down the other things they’re trying to accomplish,” he went on to say.

Roennau credited the EFG marketing department for leveraging technology to be able to deliver training material that only could be done by extensive travel and face-to-face interaction at dealerships.

“I’m not a real big tech person, but they make it easy for me,” Roennau said.

“Our message is just growing,” he added later during the conversation. “What we’re attempting to do is to play off our strength in compliance that we do every day at the dealership level and be able to use technology to spread that message to other dealers where we’re not in on a daily basis.”

The first episodes of the video series are available on the EFG Companies YouTube channel. The first podcast will air on March 22 at 10 a.m. CST.

“We are in a period of immense change, with shifting consumer demands, a technology revolution and increased compliance oversight,” EFG Companies president and chief executive officer John Pappanastos said in a news release. “This Common Sense Compliance platform better enables us to help dealers take ownership of the management of a compliant yet profitable business.

“At EFG, we pride ourselves in advancing the industry through our client engagement model.  This platform marks another step towards achieving that goal,” Pappanastos went on to say.

For more information on EFG’s upcoming podcasts and video series, visit this website.

Hudson Cook elects 3 new partners

Hudson Cook announced the election of three attorneys to the partnership this week. The group includes Robert Gage, Lauren Hunt and Jennifer Sarvadi.

Gage helps the firm’s clients solve complex problems with practical advice on legal matters, risk management, and strategy. He focuses his practice on regulatory compliance matters related to automotive finance and privacy, and on transactional matters including inventory finance and other commercial lending activity. Gage is in the firm’s Ann Arbor, Mich., office.

Hunt assists national and state banks, savings associations, credit unions, mortgage bankers, other licensed lenders, and motor vehicle dealers in the development and maintenance of nationwide consumer mortgage and automobile finance programs.  She is in the firm’s Richmond, Va., office.

Sarvadi counsels businesses in the financial services industry on compliance with federal and state regulations and consumer protection laws.  She is an active member of the firm’s credit reporting and government investigations, examinations and enforcement practices, and represents clients in enforcement actions and litigation before federal and state agencies.

“Bob, Lauren and Jennifer are accomplished attorneys whose skill and expertise provide critical support for our clients,” Hudson Cook chairman Michael Benoit said. “We are thrilled to welcome them as our partners.”

Personnel moves by GWC Warranty & Carleton

GWC Warranty — a provider of used-vehicle service contracts and related finance and insurance products sold through dealers — and Carleton, a provider of compliant financing calculation and digital document software solutions, each made personnel moves this week.

At GWC Warranty, the company promoted Mike Silverman to the position of director of marketing strategy.

Silverman joined GWC Warranty in 2014 as the manager of product strategy and has since overseen product improvements and new product development aimed at helping dealers sell more vehicles. In his new role as director of marketing strategy, GWC Warranty said Silverman will have added input and influence over all aspects of the company’s marketing strategy.

“Mike’s accomplishments during his tenure at GWC have consistently contributed to the success of our dealer partners and in turn been a key factor in our company’s growth in recent years,” GWC Warranty chief executive officer and president Rob Glander said.

“We are confident that his leadership and vision for our future will continue to have a positive impact on GWC as a whole,” Glander continued.

The company also recently released the fourth video in the award-winning Behind The Wheel dealer story series.

The latest release in the Behind The Wheel series features Texas Cars Direct, a luxury used-car dealer in Dallas. GWC Warranty highlighted Texas Cars Direct’s story is one entrepreneurship and a unique zero-frills approach to buying high-end used vehicles that is complemented by a quality VSC product provided by GWC Warranty.

Owner Pete Bulban opened the dealership more than 35 years ago and has been making luxury vehicle ownership affordable ever since.

“Behind The Wheel continues to uncover and document impactful stories of dealers and their personal visions for success,” Glander said. “The story of Texas Cars Direct is truly unique while also bringing to life the entrepreneurial spirit that so many dealers share.

“These types of businesses are a natural fit for GWC’s commitment to provide a best-in-class vehicle service contract experience,” Glander went on to say.

Behind The Wheel, winner of a 2015 Automotive Communication Award, pulls back the curtain to unveil the people and communities that make dealers successful.

Each dealership’s story also delves into how GWC Warranty’s service, products, training and technology align with dealers’ missions to operate reputable, successful businesses.

To view the story of Texas Cars Direct, as well as past Behind The Wheel videos, visit www.GWCwarranty.com/BehindTheWheel.

Carleton broadens offerings & adds staff

This week, Carleton announced the second of a series of initiatives to help promote compliance success for its clients with federal regulatory changes possibly coming this year involving the Consumer Financial Protection Bureau and other uncertainty surrounding the Dodd-Frank Act.

Carleton expanded its compliance support with the addition of an expert with proven legal experience.

Attorney Sarah Way has joined the Carleton team, bringing with her valuable legal background and expertise which includes business law, contract development and documentation, intellectual property regulations, property insurance law and other litigation disciplines.

”I came to know of Carleton through its reputation in the local, South Bend community,” Way said. “But it quickly became clear that Carleton is a compliance leader in the area of consumer finance. I’m thrilled to be joining Carleton as they continue to grow and thrive in the industry.”

Way will be tasked with supporting Carleton’s software solutions. The comprehensive solution suite of CarletonCalcs, CarletonDocs, CarletonAudit, and CarletonAccess can help finance companies mitigate legal and regulatory risk compliance of consumer loan calculations. These technologies include federal and state-specific installment contract/lease calculations, digital document generation, electronic-audit reporting, and other compliance tools to support various financing compliance mandates.

“Sarah will add tremendous legal expertise to our compliance research department,” Carleton president and CEO Pat Ruszkowski said. “The addition of Sarah Way demonstrates Carleton’s long term commitment to provide lenders with expert solutions and support that will meet the ever changing compliance landscape.

“We intend to enhance our compliance leadership position in 2017 so that we can continue to help drive the success of our customers and earn their satisfaction and trust,” Ruszkowski went on to say.

Before Carlton brought on Way, its management team made the first of multiple executive additions expected this year by hiring Pete Radike as director of client and channel engagement.

Radike brings more than 20 years’ experience providing leadership and solutions to the consumer, business, mortgage, credit card, auto, and private label lending industries. His diverse industry knowledge and extensive client-centric background further enhances and drives the current Carleton team towards the future.

“Pete’s vast compliance experience providing nationwide LOS solutions greatly compliments Carleton’s 40 years providing compliance solutions to the consumer lending industry,” Ruszkowski said. “The addition of Pete represents Carleton’s commitment to drive current and future clients towards compliance success.”

Prior to joining the Carleton team, Radike spent nearly 12 years as director of product management and strategy at Fiserv.

“Carleton’s continued leadership in the mission-critical compliance industry for more than 40 years demonstrates its commitment to lending success on behalf of its clients,” he said. “It is both exciting and satisfying to join the standard-bearer for loan origination compliance throughout the financial services industry.”

FTC’s primary dealership penalty enforcer leaving agency

The Federal Trade Commission official who championed investigations and handed out significant penalties against dealerships for misdeeds involving financing, advertising and more is departing the regulator.

FTC acting chairman Maureen Ohlhausen announced this week that Jessica Rich, director of the bureau of consumer protection, is leaving the agency on Friday after 26 years of service.

As bureau director, Rich managed eight consumer protection divisions and eight regional offices charged with stopping consumer fraud and deception and protecting consumers’ privacy. Under her tenure, the bureau brought a series of major law enforcement actions, several of which involved dealerships.

SubPrime Auto Finance News reached out to compliance expert Randy Henrick for reaction to this FTC announcement. A leading voice about compliant advertising practices, Henrick was Dealertrack’s regulatory and compliance counsel for 12 years and now conducts industry consulting at www.autodealercompliance.net.

“Well, I would have to say that Ms. Rich’s departure is a great loss to the FTC and to consumer protection interests generally,” Henrick said via email. “She did many positive things. But in recent years, she really fostered the ‘regulation by enforcement’ philosophy on many issues such as dealer advertising.” 

Last September, the FTC asserted nine Los Angeles-area dealerships and their owners used a wide range of “deceptive and unfair” sales and financing practices such as yo-yo financing and payment packing, according to an action filed in the U.S. District Court for the Central District of California that sought to end these practices and return money to consumers.

In March 2015, Rich, the FTC and 32 law enforcement partners announced the results of what they dubbed “Operation Ruse Control,” a nationwide and cross-border crackdown aimed at what they contend was an effort to protect consumers when purchasing or leasing a vehicle. The matter included 252 enforcement actions and six new FTC cases involving more than $2.6 million in monetary judgments.

Rich’s recent efforts weren’t just associated with matters involving dealers before vehicle delivery.

Rich was part of a September 2015 action against Texas-based Tricolor Auto Group, which had to pay $82,777 in civil penalties as part of a settlement to address issues associated with the group’s related finance company. The FTC charged that Tricolor — which specializes in connecting with Hispanic customers at 16 locations in Texas and another lot in Oklahoma City — failed to have written policies and procedures regarding the accuracy of reported credit information and failed to properly investigate disputed consumer credit information.

Rich, who joined the agency in 1991, was a past recipient of the FTC Chairman’s Award, the agency’s highest honor for meritorious service.

“We are grateful to Jessica for her many years of service to the FTC and the public,” Ohlhausen said. “She is a pioneer in consumer protection who spearheaded major initiatives regarding consumers’ privacy, data security, and financial transactions. Many of the FTC’s programs bear her indelible mark.”

As far as the replacement for Rich at the regulator, Henrick added, “Hopefully, her successor will use the FTC’s power under Dodd-Frank to propose and issue regulations in a more transparent manner giving interested parties a chance to comment especially when it comes to the agency’s authority over franchised auto dealers.”

At least for the short term, we now know who Rich’s replacement is as on Wednesday Ohlhausen appointed Thomas Pahl, a partner at the Washington, D.C. law firm of Arnall Golden Gregory, to be the acting director of the FTC’s bureau of consumer protection.

 “Tom’s career demonstrates his continuing commitment to protecting consumers through active enforcement and advocacy that promotes a free and honest marketplace,” Ohlhausen said. “His thoughtful approach will help ensure consumers benefit from thriving competition and innovation.

“Tom’s talent, deep consumer protection experience, and strong principles make him perfect to lead the bureau of consumer protection, and I’m very pleased to have him aboard,” she continued.

Pahl is rejoining the FTC, having served in a number of different roles starting in 1990, including management stints in the FTC’s bureau of consumer protection as assistant director in the division of advertising practices and the division of financial practices. He also advised top agency officials on consumer protection matters.

For three years, Pahl advised Reagan appointee and FTC commissioner Mary Azcuenaga. And he later served for four years as an attorney advisor for Republican FTC commissioner Orson Swindle.

Pahl previously served a detail to the U.S. Senate Judiciary Committee under the leadership of chairman Orrin Hatch, focusing on antitrust and consumer privacy issues. Pahl also has worked as an adjunct professor of law at George Mason University’s Antonin Scalia Law School, and is a member of the Federalist Society.

More recently, Pahl has worked on consumer financial protection issues (especially credit reporting and debt collection issues) as a partner at Arnall Golden Gregory, and on debt collection issues at the Consumer Financial Protection Bureau.

Trump’s 7 ‘core principles’ for financial regulation

Before Tom Brady and the New England Patriots claimed another Super Bowl victory on Sunday night, President Trump released his latest executive order and outlined what he called the “core principles” of financial system regulation, generating a wide array of industry-supporting and consumer-backing organization reactions.

These “core principles” arrived at the same time Trump instructed the Treasury Secretary to meet with member agencies of the Financial Stability Oversight Council — which includes the Federal Reserve, the Consumer Financial Protection Bureau and the Securities and Exchange Commission — to examine the components of the Dodd-Frank Act and what portions potentially can be reduced or even eliminated.

“We expect to be cutting a lot out of Dodd-Frank because, frankly, I have so many people, friends of mine that have nice businesses that can’t borrow money. They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank,” Trump said ahead of Friday’s Strategy and Policy Forum; an event that included Jamie Dimon of J.P. Morgan Chase, Mary Barra of General Motors and Dan Yergin of IHS Markit.

During his weekly radio address, Trump added, “On every single front, we are working to deliver for American workers and American families. You, the law-abiding citizens of this country, are my total priority. Your safety, your jobs and your wages guide our decisions.

“We are here to serve you, the great and loyal citizens of the United States of America,” the president went on to say.

Before going into the reaction of organizations such as the National Automotive Finance Association and the American Financial Services Association, here are those seven “core principles” Trump outlined:

— Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth

— Prevent taxpayer-funded bailouts

— Foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry

— Enable American companies to be competitive with foreign firms in domestic and foreign markets

— Advance American interests in international financial regulatory negotiations and meetings

— Make regulation efficient, effective, and appropriately tailored

— Restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

After reviewing Trump’s latest executive order, NAF Association executive director Jack Tracey expressed support in an email message to SubPrime Auto Finance News.

"The National Automotive Finance Association commends the president’s commitment to review the Dodd-Frank Act and the regulatory environment surrounding the consumer finance. And we support his seven core principals of regulation as the foundation for the review," Tracey said.

"Our financial system is a principal driver of the country’s prosperity," he continued. "Unnecessary and overly restrictive regulation limits the role the financial community plays in growing the economy, creating jobs and providing individuals with the ability to have access to credit to finance their transportation needs. 

"The auto financing industry is anxious to work with regulators to build a marketplace where consumer rights and interests are protected and funding for car financing is readily available," Tracey went on to say.

In a separate email message to SubPrime Auto Finance News, AFSA vice president of communications Jack Ferry said, “The American Financial Services Association (AFSA) has worked to protect access to safe, responsible consumer credit for over 100 years. Today’s executive order will examine the federal regulatory burden that many financial services companies face, with the goal of reducing that burden and expanding credit access nationwide. 

“AFSA will continue to illustrate the important role that access to consumer credit plays in the American economy,” Ferry added.

Also chiming in was the Financial Services Roundtable, which represents the largest integrated financial services companies providing banking, insurance, payment and investment products and services to the American consumer.

“Modernizing America’s financial regulatory system in ways that will grow the economy, create jobs and protect consumers as well as taxpayers is a key ingredient to boosting financial opportunities for America’s families and businesses,” said Financial Services Roundtable chief executive officer Tim Pawlenty, a former presidential candidate and governor of Minnesota.

More reaction from industry supporters

When seeing the White House developments, Consumer Bankers Association president and CEO Richard Hunt disseminated immediate reaction via his Twitter account.

“The latest executive order on financial regulations is a signal to the marketplace and consumers,” Hunt posted.

“Banks are better capitalized today than in history. Now is the time to look to reforms and bring balance back. Time to move this economy,” he added in another Tweet.

Two other organization that represent institutions that not only participate in auto financing but also hold deposits and offer other services reacted affirmatively to what Trump did. Those comments included:

Rob Nichols, American Bankers Association president and CEO:

“While banks have continued to meet the needs of their customers, clients and communities to the best of their ability, they have faced tremendous headwinds that came with a sharp increase in highly prescriptive government regulation and the sheer weight of more than 24,000 pages of proposed and final Dodd-Frank rules.

“We appreciate the administration’s support for pro-growth policies so banks can go even further in helping communities and our economy thrive. Reducing the strong regulatory headwinds banks face is critical to increasing lending that drives job creation across America.

“A sensible and careful review of Dodd-Frank and other financial regulations can and should strengthen those goals while unleashing the power of the banking industry — from small towns and communities to our nation’s financial centers — to fuel the increase in economic prosperity that we all seek. We look forward to working in a bipartisan manner with the administration, Congress and bank regulators on policy changes that will keep banks strong and focused on providing the capital that is so essential to rebuilding our economy.”

Jim Nussle, Credit Union National Association president and CEO:

 “We appreciate the administration's direction to ensure that regulations are appropriately tailored to target those harming consumers and to provide more consideration to the impact of these regulations on American consumers.

“The current one-size-fits-all style of regulation does not work for Main Street – local credit unions, small banks, and the consumers and small businesses they serve. We're hopeful that the core principles spelled out today will help ensure community financial institutions and the millions of Americans that rely on them are able to operate in a more favorable environment. We stand willing to work with the administration and Congress to make appropriate changes to achieve these goals.”

Pushback against Trump’s actions

While the CFPB declined to offer an official comment to Trump’s executive order, a host of other consumer-oriented groups expressed varying degrees of disappointment. Here are a couple of examples.

According to Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, “Making the financial system more fair and transparent is essential to providing low-income and minority communities with more economic stability. Over the past decade, our country has learned hard lessons about what happens when the game is rigged and regulators turn their backs to reckless subprime mortgages, payday loan debt traps, and shady bank account fees.

“President Trump seems bent on forgetting those lessons and on betraying the people he professed to represent when he talked about a ‘rigged’ system,” Henderson continued.

And Lisa Donner, executive director of Americans for Financial Reform, added, “Wall Street titan Goldman Sachs seems to be taking over financial regulation in the United States, trying to make it easier for them and other big banks like Wells Fargo to steal from their customers and destabilize the economy. That is a betrayal of the promises Trump made to stand up to Wall Street. If they succeed it will have painful consequences.”