Category: Compliance

Categories
Compliance

New DOD Interpretation Opens Options for Lenders

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

In February, the Department of Defense (DOD) issued a statement regarding its interpretation of
the Military Lending Act (MLA). According to a filing in the Federal Register,

“The Department of Defense (Department) is amending its interpretive rule for the
Military Lending Act (the MLA). The MLA, as implemented by the Department, limits the military annual percentage rate (MAPR) that a creditor may charge to a maximum of 36 percent, requires certain disclosures, and provides other substantive consumer protections on “consumer credit” extended to Service members and their families. The Department is now withdrawing the amended question and answer number 2 (Q&A #2), published in the December 14, 2017 Interpretive Rule, which discussed when credit is extended for the purpose of purchasing a motor vehicle or personal property and the creditor simultaneously extends credit in an amount greater than the purchase price of the motor vehicle or personal property.”  – federalregister.gov/d/2020-04041

This statement follows a joint petition filed in January 2018 by the National Automobile Dealers Association (NADA) and the American Financial Services Association (AFSA) requesting the DOD review the interpretation. When the DOD issued its 2017 interpretation, there was no public notice or opportunity for the NADA and other retail automotive trade associations to comment on the implications.

Continue reading “New DOD Interpretation Opens Options for Lenders”
Categories
Compliance

Guarding Against Fraud

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

Instances of fraud have been on the rise lately and regulatory agencies at both the state and federal level have been keeping a watchful eye on the automotive lending industry. Research in 2017 showed that fraud cost the auto industry between $4- to – $6 billion – in one year! Data from PointPredictive shows the dramatic jump between 2015 to 2017. While the research has not been updated for 2019, it’s likely a similar picture.

Source: PointPredictive

This correlates closely with the implementation of microchips to credit and debit cards. Starting in 2015, the use of microchips rose, making credit cards more difficult to counterfeit, and forcing criminals to focus on other types of fraud like new account fraud.

Continue reading “Guarding Against Fraud”
Categories
Compliance

FTC Amendments Strive To Keep Up with Technology

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

In April, the Federal Trade Commission (FTC) published in the Federal Register its proposed amendments to the 2000 Privacy Rule and 2003 Safeguards Rule. The genesis of these amendments is based on the FTC’s enforcement experience, and are intended to keep pace with technological developments within the financial industry. The proposed revisions relevant to automotive lenders fall under the Gramm Leach Bliley Act (GLBA).

Changes to the Privacy Rule

Revisions to the Privacy Rule would result in two substantive changes:

  1. The scope and definition of “financial institution” was modified to include entities that are engaged in activities that are incidental to financial activities, to bring both rules into accordance with the CFPB’s Regulation P (Privacy of Consumer Financial Information).
  2. The annual privacy notice requirements were modified to implement statutory changes to the GLBA enacted by the Fixing America’s Surface Transportation Act (the FAST Act).

The FAST Act established that a financial institution is not required to provide an annual privacy notice under the Privacy Rule if it:

  • only shares NPI with nonaffiliated third parties in a manner that does not require notice of an opt-out right to be provided to its customers; and,
  • has not changed its privacy policies and practices with respect to the disclosure of NPI since it last provided a privacy notice to its customers.

The CFPB published a final rule to implement these statutory changes in September 2018. The FTC’s proposal would amend the annual notice requirements to bring it in line with the FAST Act and the CFPB regulations.

Continue reading “FTC Amendments Strive To Keep Up with Technology”