Auto Finance
Practice Overview
The auto finance industry finds itself in the crosshairs of various state and federal agencies. In response, Buckley is able to apply its deep knowledge of consumer financial services law, as well as broad experience in litigation, enforcement, and transactional matters, to the needs of the auto finance industry.
We bring an experienced perspective, an understanding of how the auto finance industry works, and an appreciation for the issues that are most likely to be scrutinized by regulators. We help clients assess and mitigate risks in their existing operations, design new products, vendor management (including evaluating counterparties for prospective transactions), obtain necessary licenses, defend private litigation, resolve governmental enforcement actions, and negotiate and document critical third-party relationships as well as the purchase and sale of auto loans/receivables.
Our team advises on the key federal and state legal and regulatory compliance issues for auto finance, including the Consumer Financial Protection Bureau’s (CFPB) entry into the supervision of nonbank auto finance companies, fair lending, leasing, compliance with state installment sales acts and consumer credit codes, motor vehicle leasing, servicing and collections, repossession, and replevin. We counsel clients on issues pertaining to privacy, identity theft, and data security, and assist bank and nonbank finance companies with supervisory examinations and other regulatory matters.
We are also called upon regularly to conduct legal reviews and structure technology platforms for digital auto finance operations, including systems for the creation, storage, and transfer of “electronic chattel paper.” We participate in the development of the American National Standards Institute (ANSI) technical standard approved by ANSI’s Accredited Standards Committee, X9: ANS X9.103-2004 (Motor Vehicle Retail Sale and Lease Electronic Contracting) to provide guidance for the creation of electronic chattel paper in the automotive industry.
Noteworthy matters include:
- Represented American Honda Finance Corporation in its $24 million settlement with the Department of Justice (DOJ) and CFPB in a fair lending matter related to dealer participation practices
- Ongoing representation of multiple indirect auto finance companies in an investigation by the New York Department of Financial Services (NYDFS) into fair lending compliance
- Engaged in a 50-state lease review and re-write for a large national bank
- Completed a 50-state licensing survey applicable to indirect lending, leasing, securitization trusts, and insurance agencies for the U.S.-based captive finance subsidiary of a major foreign auto maker
- Represented an indirect auto finance company in a state attorney general investigation regarding the company's marketing of its inspection process and service warranties
- Conducted numerous compliance risk assessments related to originations, collections, credit reporting, and ancillary products
- Developed or enhanced fair lending compliance programs for more than a dozen banks and companies engaged in auto finance
Articles
"Equipment finance: Understanding licensing obligations" by Kathryn L. Ryan, Moorari K. Shah, and Frida Alim (Equipment Leasing & Finance Magazine)
Licensing Considerations, Generally The applicability of state licensing laws may depend on multiple factors, including transaction structures, business entity types and whether the activities are appropriately classified as “commercial” or another type of non-consumer transaction. Although the...
Articles"Hurricane Florence: How state laws protect service members" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
As the southeastern United States braces for Hurricane Florence, the governors of North Carolina, South Carolina and Virginia have authorized their state National Guard for response efforts, and neighboring governors in Maryland and West Virginia have placed their National Guard members on notice...
ArticlesJohn C. Redding, Marshall T. Bell, and Megan E. Whitehill Authored a Law360 Article, "Ability-To-Repay Enforcement Comes To Auto Finance"
In recent years, regulators and enforcement agencies have eagerly exercised their authority to prosecute what they perceive as unfair or deceptive acts and practices (UDAPs). Unfortunately for the auto finance industry, these regulators and agencies show no sign of tapping the brakes on such...
ArticlesSpecial Alert: District Court Confirms Telephonic Consent to Preauthorized ACH Debits Complies with ESIGN and EFTA
On February 17, a U.S. District Court in Nashville, TN found that a creditor complied with both the Electronic Signatures in Global and National Commerce Act [1] (“ESIGN”) and the Electronic Fund Transfer Act [2] and its implementing regulation, Regulation E [3] (collectively “EFTA”) when it...
ArticlesSpecial Alert: CFPB's Proposed Rule Regarding Payday, Title, and Certain Other Installment Loans
On June 2, 2016, the CFPB published its proposed rule (the “ Proposed Rule ”) addressing payday loans, vehicle title loans, and certain other installment loans (collectively “covered loans”). This alert summarizes the Proposed Rule and compares the Proposed Rule to the CFPB’s March 26, 2015 outline...
ArticlesYear in Review: Auto Finance and the CFPB in 2015
The auto finance industry gained a new regulator in 2015 with the publication of the CFPB’s larger participant rule , which, for the first time, allows the Bureau to supervise larger non-bank auto finance companies. In this new compliance environment, larger participants would be prudent to...
ArticlesAncillary Products Are Anything but Ancillary for the CFPB
It’s no secret that the Consumer Financial Protection Bureau (CFPB) has its sights set on the U.S. automobile finance industry. As evidenced by recent CFPB Bulletins and consent orders with indirect auto finance sources, the CFPB’s current focus within the industry is largely on the practice of...
ArticlesSpecial Alert: CFPB Finalizes Rule to Oversee Nonbank Auto Lenders
On June 10, the CFPB issued its final rule to oversee “larger participant” nonbank auto finance companies. Although the CFPB received significant feedback during the comment period, the final rule is nearly identical to that proposed in September 2014. Under the final rule, the CFPB will have...
ArticlesSpecial Alert: CFPB Takes Enforcement Action Against "Buy-Here, Pay-Here" Auto Dealer for Alleged Unfair Collection and Credit Reporting Tactics
On November 19, the CFPB announced an enforcement action against a ‘buy-here, pay-here’ auto dealer alleging unfair debt collection practices and the furnishing of inaccurate information about customers to credit reporting agencies. ‘Buy-here, pay-here’ auto dealers typically do not assign their...
ArticlesStarter Interrupters Expose Lenders to SCRA Risks
As the subprime auto loan market has grown over the past few years, so too have the number of starter interrupters in use. According to a recent New York Times story, these devices have been installed in approximately 2 million vehicles and are used in about one-quarter of all subprime auto loans...
Articles
News & Blogs
Florida AG settles UDAP action with auto dealership
On August 5, the Florida attorney general announced a $1.2 million settlement with a Florida auto dealership and its owner (defendants) for allegedly violating the state’s Unfair and Deceptive Trade Practices Act by failing to pay off outstanding liens on vehicle trade-ins. According to a complaint...
InfoBytesDistrict Court grants preliminary approval to national bank's auto lending settlement
On August 5, the U. S. District Court for the Central District of California granted preliminary approval and class certification to a settlement of at least $393.5 million to resolve multidistrict allegations that a national bank added force-placed auto insurance to auto loans that may have been...
InfoBytesDOJ announces $3 million SCRA settlement with auto finance company
On August 1, the Department of Justice (DOJ) announced a $3 million settlement with a captive auto finance company, resolving allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 113 vehicles owned by SCRA-protected servicemembers without first obtaining court...
InfoBytesRhode Island says service contracts are not insurance
On July 15, the Rhode Island governor signed H 5674 , which clarifies that service contracts, vehicle theft protection product warranties, and vehicle maintenance agreements are not considered insurance and are therefore exempt from the state’s insurance code. The bill also amends definitions under...
InfoBytesDelaware authorizes participation in multi-state automated licensing system
On June 27, the Delaware Governor signed HB 199 , which, among other provisions, authorizes the Delaware State Bank Commissioner to participate in a multi-state automated licensing system that will assist in the facilitation of the application and licensing process for mortgage loan brokers,...
InfoBytesHawaii amends motor vehicle service contract definition
On July 2, the Hawaii governor signed HB 154 , which clarifies that motor vehicle service contracts regulated by the Insurance Commissioner include contracts for certain motor vehicle repair and replacement services. The bill amends the law’s definition of “service contract” to include a specified...
InfoBytesJohn C. Redding extensively quoted in Powersports Finance article, “Debt collection proposal may spark tighter vendor oversight”
John C. Redding was extensively quoted on July 10, 2019 in a Powersports Finance article, “Debt collection proposal may spark tighter vendor oversight,” which discussed Consumer Finance Protection Bureau’s (CFPB) proposed revisions to the FDCPA that includes limits on the number of calls debt...
In The NewsJohn C. Redding extensively quoted in an Auto Finance News article, “Comments pour in on CFPB’s debt collection proposal”
John C. Redding was extensively quoted on July 9, 2019 in an Auto Finance News article, “Comments pour in on CFPB’s debt collection proposal,” which discussed the large number of comments that have been filed in response to the Consumer Financial Protection Bureau’s proposed amendments to the Fair...
In The NewsJohn C. Redding extensively quoted in a Powersports Finance article, “New robocall ruling could block lenders from calling consumers”
John C. Redding was extensively quoted on June 10, 2019 in a Powersports Finance article, “New robocall ruling could block lenders from calling consumers,” which discussed the Federal Communications Commission’s new ruling allowing voice service providers to block unwanted robocalls. The article...
In The News9th Circuit upholds rejection of consumer’s class action against auto finance company
On May 30, the U.S. Court of Appeals for the 9th Circuit affirmed summary judgment in favor of an auto finance corporation and various dealerships (collectively, “defendants”) in a putative class action alleging the defendants failed to provide add-ons the plaintiff purchased with the vehicle. The...
InfoBytes
Press Releases & Announcements
Buckley Sandler launches APPROVED licensing service
WASHINGTON, D.C. (March 7, 2018) – Buckley Sandler LLP today formally announced the launch of APPROVED , a new approach to licensing for financial services companies. Buckley Sandler is building upon years of financial services experience and licensing know-how to offer APPROVED, a technology-...
Press ReleasesBuckleySandler Hosts Eighth Annual Fair Lending Today Conference
BuckleySandler LLP hosted its eighth annual Fair Lending Today conference in Washington, DC on March 13-14, 2016. The two-day event featured an evening of interactive roundtable discussions on fair lending issues, followed by a full day of seminars. The sessions were led by BuckleySandler attorneys...
Press ReleasesBuckley Sandler Hosts Annual Fair Lending Today Conference
Buckley Sandler LLP hosted its annual Fair Lending Today conference in Washington, DC, March 15-16, 2015. The two-day event featured an evening of interactive roundtable discussions on fair lending issues, followed by a full day of seminars. The roundtables and seminars were led by Buckley Sandler...
Press Releases
Our Auto Finance Team
Partners
Recent Blog Posts
-
August 8, 2019
Florida AG settles UDAP action with auto dealership
-
August 7, 2019
District Court grants preliminary approval to national bank's auto lending settlement
-
August 2, 2019
DOJ announces $3 million SCRA settlement with auto finance company
-
July 25, 2019
Rhode Island says service contracts are not insurance
-
July 12, 2019
Delaware authorizes participation in multi-state automated licensing system