Auto finance industry still paying for past sins

Jim Henry is a special correspondent for Automotive News.

Consumer Financial Protection Bureau regulators seem to have a caricature of a plaid, polyester sport coat-wearing car salesman in mind when they talk about auto retailing. (Picture the salesman in the movie Fargo who won’t take no for an answer from an angry customer who refuses to buy “Tru-Coat sealant.”)

CFPB Director Richard Cordray, in opening remarks at a hearing last week, cited rustproofing when he talked about aftermarket products.

Rustproofing? How long has it been since rustproofing was a big issue? Rusty Jones Inc. filed for bankruptcy protection in 1988, more than 25 years ago. Ziebart International Corp. still offers “rust protection,” but even that company has a diverse lineup today, with other products and services such as paint and fabric protection.

Yet the memory of spray-on rustproofing still sticks in the craw of popular opinion. Check online some time. There are countless articles, blog posts and chat room comments warning against aftermarket rustproofing.

Here’s how Cordray described buying a car last week:

“First, people have to pick out their vehicle of choice -- the make, the model, the price, and its features. At some point, they may encounter certain add-on products such as a warranty, rustproofing, roadside protection, service plans and more.”

No wonder the CFPB seems so determined to rein in the auto finance industry. Like it or not, the industry is paying for past sins.

You can reach Jim Henry at autonews@crain.com

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