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
John 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...
InfoBytesOregon removes sunset on GAP waiver statutes
On May 24, the Oregon governor signed SB 366 , which repealed the sunset provision on statutes establishing the conditions under which creditors can offer guaranteed asset protection (GAP) waivers in connection with the sale of an automobile. Chapter 523, Oregon Laws 2015 allows creditors to offer...
InfoBytesDistrict court rules customers bound by arbitration agreement in credit inquiry dispute
On May 28, the U.S. District Court for the Southern District of Florida ruled that customers who financed a vehicle through a Florida car dealership were bound by the arbitration provision contained within a signed purchase order and retail installment sale contact. The customer plaintiffs...
InfoBytesJohn C. Redding extensively quoted in Powersports Finance article, “New Federal Trade Commissioners to focus on senior compliance officers, lawyer says”
John C. Redding was extensively quoted on May 23, 2019 in a Powersports Finance article, “New Federal Trade Commissioners to focus on senior compliance officers, lawyer says,” which discussed five new FTC commissioners and their interest in holding senior compliance officers responsible for conduct...
In The NewsIowa amends licensing requirements for service companies
On May 16, the Iowa governor signed SF 619 , which, among other things, amends the state’s service contract provider provisions to require any provider that issues, offers for sale, or sells motor vehicle service contracts in the state to be licensed as a service company. Persons who provide...
InfoBytesJohn C. Redding extensively quoted in Auto Finance News article, “Four things lenders should know to mitigate TCPA risk”
John C. Redding was extensively quoted on May 22, 2019 in an Auto Finance News article, “Four things lenders should know to mitigate TCPA risk,” which discussed the status of the Telephone Consumer Protection Act and the related issues that lenders should watch, including the reassigned phone...
In The NewsIndiana amends towing notification laws
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...
InfoBytesArizona exempts GAP waivers from insurance laws
On April 22, the Arizona governor signed HB 2674 , a bill defining the term “guaranteed asset protection waivers” (GAP waivers) and clarifying that GAP waivers are not insurance and are thus exempt from the state’s insurance laws. The Act is effective 90 days after the state’s legislative session...
InfoBytesArkansas establishes GAP waiver requirements
On April 8, the Arkansas governor signed HB 1672 , which provides a framework within which guaranteed asset protection (GAP) waivers may be offered in the state. Among other provisions, the act (i) clarifies that GAP waivers are not insurance and are exempt from the state’s insurance laws; (ii)...
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
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June 7, 2019
9th Circuit upholds rejection of consumer’s class action against auto finance company
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June 5, 2019
Oregon removes sunset on GAP waiver statutes
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May 31, 2019
District court rules customers bound by arbitration agreement in credit inquiry dispute
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May 22, 2019
Iowa amends licensing requirements for service companies
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May 15, 2019
Indiana amends towing notification laws