May 28, 2014

Webcast eyes enforcement over indirect auto lending

May 29, 2014 – CFPB's recent interest in indirect auto lending and its enforcement in that area was the focus of NAFCU's third webcast in a series on fair lending Wednesday.

Jeremiah Buckley and Lori Sommerfield, both of BuckleySandler, LLP, discussed CFPB's approach to indirect auto lending and fair lending, with particular focus on the agency's enforcement actions thus far and on best practices for credit unions for lending risk management.

Sommerfield discussed the December 2013 settlement among CFPB, the Justice Department and Ally Financial Inc. over the charge that the company discriminated against 235,000 minority consumers. The settlement included $80 million in consumer restitution and an $18 million civil penalty for the company.

Buckley noted that, like many agencies have done before, CFPB appears to be trying to make rules through enforcement actions – using such settlements to set precedents and expectations for other companies and institutions in the future. "The CFPB is basically trying to shape behavior at the dealer level," he said. "The agency is quite aggressive – surprisingly aggressive, actually, in this area."

Sommerfield also discussed a June 2013 case where CFPB settled with U.S. Bank and its non-bank partner, Dealer's Financial Services, after accusations of deceptive marketing and subprime auto loan financing practices targeting active-duty military.

Under the 2010 Dodd-Frank Act, CFPB does not have direct regulatory oversight over auto dealers, but it can regulate indirect auto lenders such as credit unions. NAFCU has raised concerns about a CFPB bulletin in March 2013 that appears to put credit unions between auto dealers and CFPB.

Wednesday's webcast will remain available for one year; all webcasts are also included in NAFCU's Compliance Webcast and Online Training Subscription.