Automotive Risk Management Partners ARMP

Federal, State, and CFPB Compliance Pressures Facing Dealerships

Terry Dortch President, Automotive Risk Management Partners

Key takeaways

  • The Federal Trade Commission and state attorney generals are among the entities dealerships must be concerned with regarding compliance.
  • Some states have formed organizations to audit dealership businesses for compliance with rules like the new car rule, the Patriot Act, and Gramm-Leach-Bliley.
  • The CFPB was recently given free reign in how it can collect monies and fund itself, and is expected to become a bigger presence.
  • Civil litigation, including a class action lawsuit involving Finley, is a growing risk alongside regulatory enforcement.
  • Compliance is becoming more complicated over time and cannot be set aside or forgotten by dealerships.

Summary

Compliance is treated by many dealerships as something to worry about later, filed away while everyone focuses on selling cars, parts, and service. This video makes the case that this approach is no longer workable given the range of regulators and legal exposure dealerships face. It names the Federal Trade Commission, state attorneys general, state institutions organized around rules like the New Car Rule, the Patriot Act, and Gramm-Leach-Bliley that audit dealers internally, and the CFPB, which recently gained new funding authority and is expected to become more active again. Add civil litigation, including a referenced class action against Finley, and the exposure adds up on multiple fronts at once.

For a dealer principal, GM, or F&I director, the message is that compliance can't be shelved as a side project handled once a year or only when a problem surfaces. Dortch argues the regulatory and legal landscape is only getting more complicated, not less, so treating it as background noise creates real risk rather than saving time. The practical takeaway is to actively manage compliance on an ongoing basis and, if the dealership isn't already working with a qualified compliance provider, to get one in place before an audit, regulator inquiry, or lawsuit forces the issue.

Transcript

Compliance cannot be shelved

Hi, my name is Terry Dortch. I'm with Automotive Risk Management Partners. I want to talk to you today about compliance and this thought that maybe it can be shelved, that it's something that we can think about later, or that we can worry about some other time, or it seems to be that compliance isn't anywhere close to the forethought. And I get it, you're in the car business, your ultimate goal, sell cars, parts and service. I understand all that. But there's a number of different things that you need to be concerned with.

Regulatory bodies overseeing dealerships

Number one, the Federal Trade Commission. Number two, the state attorney generals. Number three, there's some state institutions that were organized around the rules of the new car rule, the Patriot Act, Gramm-Leach-Bliley. So some of these states have formed organizations to go out and audit internally, or audit their businesses and things that are required to follow those programs.

CFPB funding changes and litigation risk

In addition to that, you've got the CFPB. Many of you probably have forgotten about that, but a few years ago they were a big, big noise. They're going to become a bigger noise. They've been, within the last six months or so, they were given free reign as far as how they can collect monies and fund themselves. So all of that, combined with civil litigation, we've seen it now with Finley, there was a class action lawsuit.

Compliance will only grow more complex

My point in all of this is that you can no longer take and shove the whole concept of compliance and put it over here on a nice, neat little place and forget about it. You need to pay attention to it. And I'm not trying to give you scare tactics, I'm just telling you up front, this isn't going away, and it's only going to become more and more complicated.

Call to action for compliance help

Please, if you're not doing business with a good compliance company, give us a call. The information is here right on the screen. Thanks, talk to you later.

Questions this video answers

What agencies and entities should dealerships worry about regarding compliance?

The Federal Trade Commission, state attorney generals, and state institutions organized around rules like the new car rule, the Patriot Act, and Gramm-Leach-Bliley all have oversight. Some states have formed organizations specifically to audit dealership businesses for compliance with these programs.

Is the CFPB still a compliance concern for dealerships?

Yes. The CFPB was a big presence a few years ago and many may have forgotten about it, but within the last six months or so it was given free reign in how it can collect monies and fund itself, and it is expected to become a bigger presence again.

Why can't dealerships postpone dealing with compliance?

Compliance involves multiple federal and state regulators plus civil litigation risk, such as the Finley class action lawsuit. This combination means compliance is not going away and is only going to become more complicated over time.

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Covered in this video

  • Federal Trade Commission
  • Gramm-Leach-Bliley Act
  • CFPB
  • Patriot Act
  • civil litigation