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On May 6, the Indiana governor signed HB 1183, which amends the state statute concerning the release of an abandoned motor vehicle that has been towed to a storage yard or towing facility. Among other things, the bill revises notification requirements for towed vehicles, providing that a public agency or towing service must conduct a search of the National Motor Vehicle Title Information System or an equivalent database to attempt to obtain the name of the person who owns or holds a lien on the vehicle and contact that person within three days regarding charges and the potential to auction the vehicle if not claimed. The bill also provides inspection rights for owners and lienholders of vehicles and allows for a towing service or storage yard to charge an inspection fee for inspections or retrievals from the vehicle. The bill is effective July 1.
On March 6, the DOJ announced it reached a proposed $80,000 settlement with a California-based indirect auto lending company for allegedly repossessing servicemembers’ vehicles in violation of the Servicemembers Civil Relief Act (SCRA). As previously covered by InfoBytes, the DOJ filed a lawsuit against the company in March 2018, alleging that an investigation revealed the company failed to have policies or practices in place to verify borrowers’ military status before repossessing vehicles. As such, the DOJ argued that the defendant may have repossessed vehicles of other servicemembers without obtaining the necessary court orders or verifying military status. The investigation was triggered after an Army Private submitted a complaint about the company to the DOJ in 2016. The proposed consent order would require the company to pay a $50,000 civil penalty and issue $30,000 in compensation to a different Army Specialist, whose credit, according to the DOJ, was severely damaged as a result of a repossession by the company. In addition, the company would be required to develop policies and procedures to ensure compliance with the SCRA in the future. The consent order has not yet been approved by the court.
7th Circuit affirms summary judgment for repossession company, holds property-retrieval fee is not subject to FDCPA
On October 31, the U.S. Court of Appeals for the 7th Circuit affirmed summary judgment for a third-party repossession company and an auto lender, holding that a fee that the repossession company required to process personal items left in a repossessed car did not constitute an impermissible demand for repayment under the FDCPA. According to the opinion, after a consumer fell behind on her auto payments, the third-party company repossessed her vehicle on behalf of the auto lender. The repossession company, according to the consumer, demanded a $100 payment in order to retrieve personal property she had left in the car. The consumer sued the company and the lender arguing that the retrieval fee was an impermissible debt collection in violation of the FDCPA. In response, the repossession company and the lender moved for summary judgment, arguing that the fee was an administrative handling fee that the lender had agreed to pay to the repossession company—not a fee assessed to the consumer. The lower court agreed.
On appeal, the 7th Circuit determined that the documentary evidence showed that the $100 fee was an administrative fee that the lender agreed to pay to the repossession company, stating “[t]here is no way on this record to view the handling fee as some sort of masked demand for principal payment to [the lender].” The appellate court concluded the consumer did not establish a genuine issue of fact as to whether the repossession company demanded the $100 payment on behalf of the lender and, therefore, affirmed summary judgment in favor of the repossession company and the lender.
On March 28, the DOJ filed a complaint in the Central District of California against a California-based indirect auto lending company (defendant) for allegedly repossessing servicemembers’ vehicles in violation of the Servicemembers Civil Relief Act (SCRA). The allegations stem from an investigation into the defendant’s practices after an Army Private submitted a complaint to the DOJ in 2016. The DOJ’s investigation concluded that the defendant repossessed the vehicle without obtaining a court order or confirming whether the servicemember was SCRA-protected. According to the DOJ’s complaint, its investigation revealed that the defendant allegedly failed to have policies or practices in place to verify borrowers’ military status before repossessing vehicles. As such, the DOJ believes that the defendant may have repossessed vehicles of other servicemembers without obtaining the necessary court others or verifying military status. The DOJ contends that the defendant’s conduct was “intentional, willful, and taken in disregard for the rights of servicemembers.” In addition to monetary damages, the DOJ seeks civil monetary penalties and injunctive relief.
On January 29, the U.S. District Court for the Western District of Pennsylvania granted a motion to compel arbitration, finding that an arbitration clause set forth under extension agreements with an automobile finance company to refinance and extend the plaintiff’s loan obligation is “valid and enforceable.” Additionally, the court ruled that alternative motions to dismiss filed by other defendants were moot, and then stayed and administratively closed the matter pending the resolution of the claims subject to arbitration. The plaintiff alleged violations of her Fourth and Fourteenth Amendment rights, the Fair Debt Collections Practices Act, and several other state and federal credit statutes, when defendants—including the automobile finance company—repossessed her vehicle despite having signed extension agreements. In response to the defendants’ assertion that her claims were subject to the arbitration clause, the plaintiff argued that the extension agreements were unenforceable due to the unavailability of the “designated arbitrators,” and that defendants were barred from trying to obtain “alternative relief” by relying on additional terms outlined in a second extension agreement that released defendants from liability. However, the court ruled that the plaintiff’s failure to dispute the scope of the arbitration clause meant that the defendants were “entitled to enforcement of the arbitration clause with respect to all claims and defenses asserted,” so long as the designated arbitrators are available.
- Buckley Webcast: The next consumer litigation frontier? Assessing the consumer privacy litigation and enforcement landscape in 2019 and beyond
- Buckley Webcast: The CFPB’s proposed debt collection rule
- Buckley Webcast: Trends in e-discovery technology and case law
- Brandy A. Hood to discuss "What the flood? Don’t get washed away by a flood of changes" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano to discuss "Mitigating the risks of banking high risk customers" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano, Kari K. Hall, Brandy A. Hood, and H Joshua Kotin to discuss "Regulations that matter in a deregulatory environment" at the American Bankers Association Regulatory Compliance Conference Power Hour
- Buckley Webcast: Data breach litigation and biometric legislation
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference
- Douglas F. Gansler to discuss "Role of state AGs in consumer protection" at a George Mason University Law & Economics Center symposium