nabd, las vegas, nv tom hudson, eric johnson, allen denson ...€¦ · 33. compliance hot spots and...

33 COMPLIANCE HOT SPOTS AND WHAT TO DO ABOUT THEM

NABD, LAS VEGAS, NV TOM HUDSON, ERIC JOHNSON, ALLEN DENSON

MAY 23-25, 2017

COMPLIANCE HOT SPOTS AND WHAT TO DO

ABOUT THEM

HOT SPOT #1 - ADVERTISING

Know the federal and state rules that apply to your advertising, and know

what ads they regulate.

HOT SPOT #2 – PRICING YOUR CARS

Eliminate the difference in prices between cars you finance and those

you sell for cash. Put your prices on your cars and don’t

change the prices based on cash or financed sales.

HOT SPOT #3 – ACQUISITION FEES AND DISCOUNTS

Know the rules that apply when you sell your contracts to finance sources that charge an acquisition fee or buy your contracts at a discount – do not increase the cost of the car to cover

the fee or discount.

HOT SPOT #4 – HIDDEN FINANCE CHARGES

Don’t create other “hidden” finance

charges. For example, don’t tell buyers that you “can’t get them

financed” unless they buy a service contract.

HOT SPOT #5 – FINANCING REPAIRS

Know the rules that apply to financing repairs for your customers. Have a written policy for financing repairs, and document the transaction correctly.

HOT SPOT #6 –SID/GPS Devices

Know the rules that apply to the use of a starter interrupt device (SID) or GPS device with your customers. Provide written disclosure, don’t charge for installation or use, have a written policy and objective credit criteria re: installation and use of device.

HOT SPOT #7 –Convenience Fees

Know the rules that apply to charging a convenience fee. Can you charge a convenience fee? What does the law say? What does the contract say? Document the transaction correctly and apply to the contract.

HOT SPOT #8 –NSF Fees on Electronic Payments

Know the rules that apply to charging an NSF fee. Can you charge an NSF fee for electronic payments? What does the law say? Document the transaction correctly and apply to the contract.

HOT SPOT #9 – Fees to Reclaim Personal Property Post-Repo

Do you know the state rules that apply to maintaining buyer’s property post-repo? What does your contact say? Do you charge the buyer(s) a fee to store the property?

HOT SPOT #10 – Dual Language Materials

Ensure that your contracts, advertisements, and other consumer-facing materials are in the same language for the entire document. Do not promote features in Spanish only to provide limitations and disclaimers in English.

WHAT TO DO TO

ELIMINATE HOT SPOTS

ELIMINATING HOT SPOTS

Prepare a written Compliance Management System, and appoint a

Compliance Officer.

ELIMINATING HOT SPOTS

Prepare a written Privacy Policy, and

appoint a Privacy Officer.

ELIMINATING HOT SPOTS

Prepare a written

Red Flags Policy, and appoint a

Red Flags Officer.

ELIMINATING HOT SPOTS

Prepare a written

SID/GPS Policy re: installation and use,

and appoint an Officer to oversee.

ELIMINATING HOT SPOTS

Learn who your “federal cop” is. Stay on top of that enforcement

agency’s activities.

ELIMINATING HOT SPOTS Read the retail installment contract

you require your buyers to sign.

ELIMINATING HOT SPOTS

Read the Truth in Lending Act, Regulation

Z, the Equal Credit Opportunity Act and Regulation B, and the other federal and

state laws and regulations that

apply to your your business.

ELIMINATING HOT SPOTS

Get compliance training for your dealership people who are responsible

for sales and financing.

ELIMINATING HOT SPOTS

Created a standard process for creating and approving all advertising and marketing content. Should involve designated compliance officer

ELIMINATING HOT SPOTS

Regularly visit the websites of the

Consumer Financial Protection Bureau, the Federal Trade Commission and your

state regulatory agencies. www.consumerfinance.gov/

www.ftc.gov/

ELIMINATING HOT SPOTS

Join your state’s IADA.

Join a twenty group.

Subscribe to industry publications that cover compliance developments.

Go shopping for free or nearly free compliance resources.

ELIMINATING HOT SPOTS

Know what business you are in. If you think that you sell cars, and that you arrange for “lenders” to finance those cars by making “loans” to your customers, guess again!

ELIMINATING HOT SPOTS

Set up a compliance budget. No money allocated for compliance

means “no compliance.”

Resources Go to www.ftc.gov/ Click on “Tips and Advice,” then on “Business

Center,” then on “Advertising and Marketing” You will find these publications: Advertising and Marketing Basics Online Advertising and Marketing Telemarketing Read Them!!!!!

More Resources

• State Auto Dealer Associations • State Independent Auto Dealer Associations • NADA • NIADA • Vendors (but be very careful) • Spot Delivery • F&I Legal Desk Book • Compliance Certification

Questions?

Contact Information: Thomas B. Hudson, Of Counsel

Hudson Cook, LLP 7037 Ridge Road, Suite 300

Hanover, MD 21076 410.865.5411

thudson@hudco.com

Eric L. Johnson, Partner Hudson Cook, LLP

8524 South Western Avenue, Suite 114 Oklahoma City, OK 73139

405-602-3812 ejohnson@hudco.com

Allen H. Denson, Partner

Hudson Cook, LLP 1909 K Street, NW, 4th Floor

Washington, D.C. 20006 202-327-9718

adenson@hudco.com