Dealer associations target regulatory overreach of industry by feds

Dealer associations target regulatory overreach of industry by feds

ATAE network marks 100 years

Dealer associations from across the U.S. and Canada assembled last week in Detroit for the Annual Summer Conference of the Automotive Trade Association Executives (ATAE). WANADA CEO John OêDonnell and senior staff joined counterparts along with major dealer contractor representatives from among the fifty states, Canadaês provinces and any number of major metropolitan markets to interact among themselves and leadership from NADA, AIADA and NAMAD. A big part of the ATAE Conference focus was the national public policy and industry agenda for dealers.

Principal among the topics reviewed was overreach by U.S. regulatory agencies into dealership sales and finance practices by the Consumer Finance Protection Bureau (CFPB) and the Federal Trade Commission (FTC).

With an update on CFPBês ongoing crusade to restrict or eliminate dealers as credit arrangers in financed vehicle transactions, NADAês legal department, in tandem with NAMAD and AIADA, spotlighted unprecedented regulatory scrutiny and sanctions against banks and lending institutions working with dealers. CFPBês approach had remained fundamentally unchanged over the past year and a half where regulators allege that dealers systematically discriminate against minority vehicle buyers because they get less favorable credit offers then non minorities when dealers arrange financing. Thus, says CFPB, dealers and the lenders CFPB regulates are violating the law and dealers should no longer be in the credit arranging business.

NAMAD, with its minority dealer advocacy mission, has been especially helpful with NADA and AIADA in garnering bi-partisan support in Congress to halt CFPBês all-out attack on auto dealers, tangibly evidenced by growing support for H.R. 1737, the –Reforming CFPB Indirect Auto Financing Act.” The recent consent order CFPB obtained from American Honda Finance Corporation on alleged discrimination against minority vehicle buyers was pointed out by NADA as underscoring the importance of H.R. 1737 and the urgency to check CFPBês unbridled regulatory power (see article, below, on the Honda Finance agreement with the CFPB.)

NADA lawyers took an opportunity to promote the dealer management guide that they collaborated upon with NAMAD and AIADA, entitled Fair Credit Compliance Policy and Program, which is grounded in fair credit and anti-discrimination law. NADA dealer members may click here for this timely publication.

In addition to regulatory challenges to dealers from the CFPB, dealer association CEOs heard from NADA Legal on fresh and unprecedented enforcement actions by the Federal Trade Commission, on vehicle advertising. Though FTCês actions are mostly separate from those against dealers from the CFPB, NADA compellingly showed the unmistakable connection of federal regulatory zeal against the auto retailing industry. Over the last three years, FTC has done seven rounds of enforcement actions in 15 states against 23 dealer organizations in each agency. In addition to the standard ad enforcement actions against dealers in such areas as Truth-in-Lending and bait-and-switch, FTC regulators are pressing actions on consumer vehicle purchase transactions involving negative equity, prize promotions and purchase versus lease ads. And new last March, FTCês launch of –Operation Ruse,” in conjunction with other federal regulatory agencies, represents a more directed targeting of auto retailing, going beyond dealer to consumer transactions that include dealer service providers, such as auto parts manufacturers, title companies and, of course, finance companies.

Other federal regulatory matters reviewed at the ATAE Summer Conference included the National Labor Relations Boardês proactive involvement in such non-union areas as the long standing overtime exemption on service sales reps, and the burgeoning, but especially daunting, involvement of NHTSA in the handling of safety recalls at the dealership level in the wake of the unprecedented safety recall actions against automakers.

Download Bulletin PDF