Lender consent order grants insight into FTC
|Jim Henry is a special correspondent for Automotive News.|
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Dealers and their legal counsels should check out last week’s consent order between subprime auto lender Consumer Portfolio Services and the Federal Trade Commission, even though the case isn’t about dealerships.
Dealerships aren’t even mentioned in the consent order, and in the FTC complaint in the case, they’re mentioned only in passing as the sources for the bulk of Consumer Portfolio’s loans.
However, some of the language the FTC uses to criticize Consumer Portfolio should sound familiar to FTC watchers on the dealership side.
For instance, the consent order reminds Consumer Portfolio it must disclose “clearly and conspicuously” any fees and costs associated with loan modifications. For dealerships, that’s how the FTC describes the requirements for other disclosures, such as dealership advertising.
The FTC also orders Consumer Portfolio to establish a “data integrity program” to make sure its account information is accurate, complete and secure. Dealerships also have a lot of responsibilities for customer data.
Attorney Tom Hudson, a specialist in consumer finance law for auto dealers and lenders, agrees that dealerships ought to take a close look.
“On the face of it, I’d tell dealers to read the consent order from beginning to end,” said Hudson, a partner at Hudson Cook law firm in Hanover, Md. “It reveals a lot about what the FTC thinks about disclosure and information safeguarding responsibilities of businesses.”
The FTC clearly has dealerships in its sights, even if this time it aimed at somebody else.
You can reach Jim Henry at email@example.com.