Tag: Federal Trade Commission

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Compliance

Online Reviews and Compliance

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Over the last few years, dealers have been working hard to establish a positive online presence beyond just their website. It’s become standard practice for dealerships to be listed on websites like DealerRater, Cars.com, Edmunds.com, Yelp, and Google. The reason behind these listings is to build trust online and develop a brand presence.

After all, according to Autotrader’s Car Buyer Journey study, 60 percent of the time spent in the car buying process is in online research, with 78 percent using third-party sites or apps during the car buying process. Now, you’re probably asking yourself, what does this have to do with compliance?

In this highly integrated world of online reviews and social media, it can be tempting for dealerships to use cookie cutter, online review vendors to boost positive reviews while minimizing negative reviews. For example, one widely used tactic is asking customers to leave a review while in the dealership, on a device provided by their sales or finance manager, which puts extra pressure on the customer to leave a positive review.

Another tactic that has been used across all industries includes using contract provisions, including online terms and conditions, to penalize consumers for posting negative reviews or complaints. This specific tactic has been ruled as illegal under the Consumer Review Fairness Act (CRFA), which protects people’s ability to share in any forum their honest opinions about a business. Specifically, the CFRA makes it illegal for a company to use a contract provision that:

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Compliance

CFPB – A Year in Review

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

A lot has happened with the Consumer Financial Protection Bureau (CFPB) in the past year. From large settlements to court rulings, the CFPB brought itself under the spotlight.

Let’s start at about this time last year. The House of Representatives passed H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act” with a strikingly majority vote of 332-92. The piece of legislation would direct the CFPB to amend how it issues guidance to indirect auto lenders by:

  • providing a public notice and comment period before issuing the guidance in final form;
  • making publicly available all information relied on by the CFPB, while also redacting any information exempt from disclosure under the Freedom of Information Act;
  • consulting with the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Justice; and,
  • study the costs and impacts of the guidance to consumers, as well as women-owned and minority-owned small businesses.

In addition, the bill would nullify the CFPB’s “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act Bulletin”. This bulletin instructed lenders to either eliminate dealer pricing discretion, or constrain dealer pricing discretion by monitoring dealership practices and using “controls” to force dealerships to adjust their practices.

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Compliance

Prepared for an FTC Investigation?

Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

Earlier this month, the Federal Trade Commission (FTC) announced a planned study on the auto buying and financing experience. Since 2011, the FTC has brought more than 25 cases challenging illegal practices in the area of dealership business. These cases, combined with the Consumer Financial Protection Bureau’s (CFPB) investigation into auto financing, have most likely caused the FTC to take a close look at the retail automobile industry.

While the CFPB does not have jurisdiction over auto retail, it has created waves in the industry through auto finance regulations. Now that an agency with authority over the industry is taking a deeper look at dealership practices, it’s more important than ever to recognize and act upon the fact that it’s time for more transparency in the auto buying process.

The good news is the FTC is still in the exploratory phase of the study, asking for public comments and feedback from interested parties on how the study should be conducted. Meaning, they have a ways to go before they conduct the study, compile the results, and formulate an action plan based on those results. Dealers have time to take a closer look and tighten their processes before a large-scale investigation ensues.

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