Government Comings and Goings

Transcription

1 NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION Government Comings and Goings Shaun Petersen SVP Legal and Govt. Affairs

2 Manufacturer Recalls - Legislation in DC - Blumenthal Amendment; Rentals - Legislative Attention in CA, NYC, NJ - NIADA Position of Best Practices on Recalls - Not all Recalls are equal: Safety vs. Non-Safety - Disclosure vs. Repair - Safercar.gov VIN Specific Inquiry and Batching - Tort Liability for selling vehicles with known open Recalls - Stop Drive & Stop Sell Notifications - CPO/X-point inspection advertising

3 Military Allotment - Department of Defense Regulation Change - Ban on use of allotments for acquiring personal property - House and Senate language require report on the process behind amendement - CFPB "reminder" letters

4 CFPB - What s next? Pending Bills to Reform Structure HR 5485, CHOICE Act Reforming CFPB Indirect Lending Guidance (HR 1737 and S 2663) House Financial Services Committee Report Larger Market Participant Rule: Comments in support of 10,000 transactions a year or more up to suggested 50,000 BHPH - Reservation of Right for Potential Rulemaking Arbitration Rulemaking Debt Collection Rulemaking

5 CFPB EZCORP - Facts: - Payday, installment, auto title lender - Ceased doing those loans in the US - Allegations: - Unlawful in-person collection visits at their homes or workplaces - Risked disclosing consumers debt to third parties, and caused or risked causing adverse employment consequences to consumers such as disciplinary actions or firing - Ignored consumers requests to stop calling workplaces

6 CFPB EZCORP - Deceived consumers with threats of legal action when that was not true - Ran credit checks on despite advertising it would not - Required consumers to pay through EFT cannot condition loan on preauthorizing repayment through EFT - Made simultaneous attempts to EFT earlier than promised - Lied to consumer that could not stop EFT payments, collection calls or prepay - $7.5 mil restitution; $3 mil fine

7 CFPB In Person Collection Guidance - Heightened risk of UDAP violation - substantial injury to consumers which is not reasonably avoidable by consumers and not outweighed by countervailing benefits to consumers or competition - Third parties may learn consumers have debts in collection - Co-workers, employers, customers, roommates, neighbors - Harm reputation - Negative employment consequences

8 CFPB In Person Collection Guidance - May result in substantial injury even when there is no risk the existence of the debt will be disclosed to third parties - Employers prohibit non-work related visits - Likely or actual consequence of visit to harass consumer - FDCPA violations 3 rd party collectors

9 CFPB & FTC Credit Reporting What is the Furnisher Rule? 1. Have written policies aimed to ensure accuracy of information sent to CRA 2. Investigate and respond to consumer disputes

10 CFPB & FTC Credit Reporting CarHop Advertised that could help rebuild credit Allegedly provided inaccurate credit information Offered right to return within 72 hours Voluntary repo Reported customers as repossessed owing money Payment histories inaccurately reported Reported closed/deleted accounts

11 CFPB & FTC Credit Reporting CarHop - cont d Alleged violations Did not provide consumers address to contest inaccurate information if reason believe inaccurate Did not report good credit info Did not have reasonable policies/procedures appropriate for nature, size, complexity Furnisher Rule $6.5 million fine

12 CFPB & FTC Credit Reporting FTC Tri-Color RFC did not have policies and procedures for investigating consumer disputes Company directed consumers to dispute with CRA $83,000 fine

13 Wage and Hour Issues Classification of Employees - Independent Contractors or Employees Overtime exemptions professional, salaried employees Service advisor exemption Supreme Court

14 Dealership Exemptions Minimum Wage/Overtime Overtime Only Executive Salesman Administrative Partsman Professional Mechanic Commission-Paid Motor Carrier

15 Executive Exemption 1. The employee is in charge of a department or sub-department; and 2. The employee supervises the work of two or more full-time employees; and 3. The employee is paid a salary of at least $455 per workweek (for now).

16 Administrative Exemption 1. The employee s primary duty is non-manual office work directly related to management policies or general business operations; and 2. The employee exercises discretion and independent judgment on matters of significance; and 3. The employee is paid a salary of at least $455 per workweek (for now).

17 Professional Exemption 1. The employee s work requires advanced knowledge, invention, imagination or talent; and 2. The employee exercises discretion and independent judgment on matters of significance; and 3. The employee is paid a salary of at least $455 per workweek (for now).

18 Salesman exemption 1. The employee is employed at a retail automotive dealership; and 2. The employee s primary duty is to sell cars or trucks to customers.

19 Partsman exemption 1. The employee is employed at a retail automotive dealership; and 2. The employee s primary duty is stocking, issuing, requisitioning, or selling parts.

20 Mechanic exemption 1. The employee is employed at a retail automotive dealership; and 2. The employee s primary duty is performing mechanical or body repair work on a car or truck.

21 Commission-paid exemption 1. The employee is employed at a retail automotive dealership; and 2. The employee receives the majority of compensation in the form of commissions; and 3. The employee receives at least time and one-half the federal minimum wage ($10.89) for all hours worked.

22 Motor carrier exemption 1. The employee is employed by a motor carrier; and 2. The employee works on or drives a vehicle that weighs 10,000 lbs. or more; and 3. The employee performs safety-affecting duties for the vehicle s operation in interstate commerce.

23 White Collar Exemptions Effective December 1, 2016, minimum salary threshold will be $913 per week (paid on a salary basis ) Requirement still applies each pay period (not annualized) Thresholds will be updated every three years, with 150 days' notice

24 White Collar Exemptions Employers will be able to satisfy up to 10% of the salary threshold from nondiscretionary bonuses and incentive payments Includes commissions Can count only those paid quarterly or more frequently

25 Service Advisor Exemption In Navarro v. Encino Motors, a federal appeals court held that service advisors are NOT exempt salespersons as a result of their job duties Relied on DOL Rule that drastically changed the The issue is currently before the U.S. Supreme Court Dealerships may utilize the commission-paid exemption where available to maintain service advisors exempt status

26 DOJ Fair Lending - Auto Fare NC - Allegations: Reverse Redlining intentionally targeting African Americans for the extension of credit on unfair and predatory terms without meaningfully assessing creditworthiness - State law violations - Failure to comply with repo laws - GPS without disclosing

27 DOJ Fair Lending - Why was the suit brought? - Statements made showing interested in African American consumers - Inferior intellect - Fewer credit options - More likely to accept dealership terms - Derogatory statements - Dominant African American area

28 DOJ Fair Lending - What is required? - Documents policies and procedures for credit apps and financial documents needed - Limit total of payments per months 25% of total documented net income - Deferred down limited to 4 months/$800 total - Provide CarFax at consumer expense - Notice on car mileage, year, make, model, sales price, down payment

29 DOJ Fair Lending - What is required? cont d - Test drive consumer get inspection can have for 3 hours - Provide written notice encouraging test drive - Interest rate caps Maximum minus 5% - Charge same rate to all consumers except rate is reduced additional 3% if - - Downpayment 150% of posted - Net income more than $2499 monthly - Previously financed with dealer - FICO more than 550

30 DOJ Fair Lending - What is required? cont d - Pricing limitations 15% greater than NADA retail value - No Doc Fees - Repossession limitations - 2 consecutive installments - Within 45 days and not redeemed, 30% refund of down payment less reasonable fees no refund if more than 2,000 miles driven

31 DOJ Fair Lending - What do I do? - Must have fair lending policy - Watch what you say! - Watch easy front door access

32 State Issues - State related issues - assistance - Oregon BHPH Legislation - GPS issues - NJ, IL, CA, OK

33 State Issues - SC Doc Fee litigation Consumer charged a closing fee that wasn t directly related to the expenses incurred in closing may sue for damages under SC Dealers Act Dealer couldn t explain how closing fee calculated Court stated dealer must account for costs that comprise its closing fee and fee can t be comprised of general operating expenses Court said dealer may comply with Closing Fee Statute by setting a fee that represents avg. of costs actually incurred by dealer in all closings from prior year

34 State Issues What did the Court s opinion tell us?: The time for analysis of items included in closing fee and cost for each is the point at which the closing fee is set. Dealers are limited to actual costs of retrieving and preparing documents for closing. Costs should not include expenses for salaries of finance and sales managers, building, utilities, "outside services," no general operating expenses not directly tied to sale. It should be OK to set a closing fee in an amount that is an average of the costs the dealer actually incurred in all closings of the prior year. Closing fee is not limited to expenses incurred for document preparation, retrieval, and storage. However, any costs sought to be recovered by a dealer under a closing fee charge must be directly related to the services rendered and expenses incurred in closing the purchase of a vehicle. What about costs of forms, computer programming of closing documents, the hardware to deliver the closing documents, and other such expenses? Freeman v. J.L.H. Investments, LP, 2015 S.C. LEXIS 367 (S.C. November 4, 2015).

35 Get Involved - National Leadership Conference Sept Washington, DC - NIADA PAC Fund

36 Shaun Petersen Senior Vice President, Legal & Government Affairs S2521 Brown Blvd. Arlington, TX (office (cell)