There's a growing sense among vendors and industry lawyers that federal regulators will "do something" about spot delivery -- though no one seems to know which regulators will do what, or when.
Whether by design or by accident, if a spot delivery, in which the customer signs a contract and takes the car before the dealership sells the paper, falls through, the customer has to come back and sign a new deal -- more than likely a more expensive new deal. The Federal Trade Commission last year steered roundtable discussions on auto lending to spot delivery and so-called yo-yo financing.
Bill Fowler, CEO of E-Net Financial Services Inc., said in an interview last week that the handwriting is on the wall. He predicts the Consumer Financial Protection Bureau will make spot deliveries virtually impossible, along with a lot of other F&I practices that are standard procedure today.
Fowler's company, outside Seattle, is working on a compliance program to be sold to dealers. So it's in his interest to get dealers and lenders worried about compliance.
But that doesn't necessarily mean he's wrong.
Legal experts for the National Automobile Dealers Association and the American Financial Services Association have a different opinion. At auto finance conferences, officials from NADA and AFSA have said it's too early to tell what the Consumer Financial Protection Bureau will do. NADA also points out that franchised auto dealers were "carved out" of the bureau's jurisdiction.
Even so, that still leaves the FTC. Some day, lenders could find themselves on the hot seat over spot deliveries, and maybe dealers, too. But today, it's hard to predict who will be applying the heat.