By: Myril Shaw - Dealer Profit Services
You can read the full statement from the CFPB here (https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-rescinds-abusiveness-policy-statement-to-better-protect-consumers/).This increased investigative and enforcement activity makes it more important than ever that dealers commit to and can document their "good-faith" efforts to meet all compliance standards and guidelines. The CFPB will be making themselves more visible to consumers and so the odds of a compliance investigation will be increasing.This will also capture the attention of class-action attorneys. CFPB actions are a matter of public record. These lawyers will be watching for an opportunity to "pile-on" and bring actions not just on behalf of the named consumer but will also be reaching out to other consumers who may be potentially similarly aggrieved at other stores. This brings into play not just federal fines, but also the cost of legal proceedings and settlements.If there is any sentence in the CFPB Statement that should get everyone's attention, it is this: "Going forward, the CFPB intends to consider good faith, company size, and all otherfactors it typically considers as it uses its prosecutorial discretion."Also of consequence is what the CFPB looks for. In order to determine good faith, they will be looking for the "usual suspects":• Up to date, accurately executed Compliance Documents• Demonstration of a trained Compliance Officer• Evidence of up-to-date Staff Training• Appropriate environment: Cross-Cut Shredders; locking filing cabinets; locked Finance office; etc.• Proof that regular site inspections are occurring – looking for sloppy compliance behavior and continually bringing compliance importance to the forefront• Best practices in the handling of non-public, personally identifying information• Active procedures for identifying Identity TheftThe CFPB is also hyper-focused on differential treatment of consumer classes.This makes a well-enforced 100% Turnover policy absolutely critical. Every customer MUST receive the same presentation regarding their ability to obtain all relevant Protective Products.What constitutes "classes" when it comes to Protective Products?• Cash versus Finance• New versus Used• One Make/Model versus another• Age• Income level• Unit price• …It cannot be up to a salesperson to make a situational determination about who talks to a Finance/Business Manager – this is a conversation that needs to take place 100% of the time – no matter what. It must be a store policy enforced from the top down and documented with the customer executing a document that they have received the sale treatment as all others.This may seem like a nuisance. It may seem like overkill.How much of a nuisance will federal fines and lawsuits be? It may only be a once in a lifetime event – but that event could cripple you and your store for years to come.Good faith matters.Close only counts in horse shoes, hand grenades, and compliance!
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