Auto retail and finance regulation grows


Allen Denson, another partner at Hudson Cook, agreed. “We’ve seen more investigations and lawsuits with the attorneys general over the last two years than we had seen in the preceding years,” Denson said.

The top compliance problem? Failing to address consumer complaints, Denson said.

“Complaints that don’t get resolved at the dealer level tend to get sent on to the CFPB or the Federal Trade Commission or to state attorneys general,” he said.

The FTC brought more than 40 cases against dealerships nationwide in the past five years. And, automotive-related issues were among the top 10 complaints consumers reported to the FTC in 2018, according to a February report. The commission reported 104,604 auto-related complaints in 2018, accounting for 3.5 percent of total.

Tom Widor, a lawyer in the FTC’s Bureau of Consumer Protection, told Automotive News in March that the political climate does not affect the bureau’s enforcement priorities in the auto industry.

“We continue to monitor and take actions to make sure that companies are deterred from violating the law,” he said.

The FTC is the primary regulator for dealers, said Paul Metrey, vice president of regulatory affairs at the National Automobile Dealers Association. Because the FTC is bipartisan, he does not imagine a significant difference in activity based on which party controls the White House.

“They have three members from the president’s party, two from the opposition party, and a lot of times they speak in unison,” Metrey said.

The proposed Safeguards Rule, for example, was supported by a Republican chairman and two Democrats, he said.

The FTC is also more sensitive to regulation by enforcement, the notion of creating marketplace standards through punitive means such as a lawsuit, Metrey said.

“They’re very concerned about if you’re going to set a market standard that everybody is expected to abide by, there is a process for that,” Metrey said. “I think they’ve done a very good job of trying to make sure that happens.”

Even as the onus of auto retail and finance regulation shifts away from the CFPB, “in terms of the need to comply and do other things, there are still a number of pressure points and a lot of reasons to do everything that’s been done for years,” Metrey said.

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