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
7th Circuit vacates class decertification decision in auto finance lawsuit
On February 13, the U.S. Court of Appeals for the 7th Circuit vacated a lower court’s decision to rescind class certification for a group of automotive dealerships (plaintiffs), concluding the lower court did not provide a sufficiently thorough explanation of its decision for the appeals court to...
InfoBytesUsed car dealership fined $3 million by New York City for deceptive practices
On January 25, New York City’s Department of Consumer Affairs (DCA) announced that the city’s largest used car dealership must pay more than $3 million in civil penalties after the city’s Office of Administrative Trials and Hearings concluded the dealership used deceptive and illegal practices to...
InfoBytesNew Jersey appellate court finds arbitration provision ambiguous and unenforceable
On December 18, the Appellate Division of the Superior Court of New Jersey reversed a lower court’s order compelling arbitration, concluding the arbitration provision of the plaintiff’s auto lease agreement did not clearly and unambiguously inform the reader that arbitration was the exclusive...
InfoBytesJohn C. Redding quoted in AutoFinance News article, “Attorneys weigh in on Kraninger appointment, impact on auto lenders”
John C. Redding was quoted on December 10, 2018 in an Auto Finance News article, “Attorneys weigh in on Kraninger appointment, impact on auto lenders,” which discussed the appointment of Consumer Financial Protection Bureau Director Kathy Kraninger and how her agenda could affect auto lenders. The...
In The NewsAuto lender pays $11.8 million to resolve investigation into add-on product and loan extension program
On November 20, the CFPB announced a settlement with a Texas-based auto lender to resolve allegations that the lender violated the Consumer Financial Protection Act by deceptively marketing an auto-loan guaranteed asset protection (GAP) add-on product and misrepresenting the impact on consumers of...
InfoBytesJohn C. Redding extensively quoted in PowerSports Finance article, “Miscommunication leads to issues with e-contracting in California”
John C. Redding was extensively quoted on November 20, 2018 in a Powersports Finance article, “Miscommunication leads to issues with e-contracting in California,” where he simplifies the miscommunication in regard to e-contracting compliance for lenders and dealers in California. — "Dealerships in...
In The News7th 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...
InfoBytesDOJ settles with credit union for alleged SCRA violations
On November 2, the DOJ announced a $95,000 settlement with a credit union resolving allegations that the credit union violated the Servicemembers Civil Relief Act (SCRA) by repossessing vehicles owned by servicemembers without first obtaining the required court orders. According to the complaint ,...
InfoBytesJohn C. Redding quoted in an Auto Finance News article, “Attorneys seek CFPB definition of abusive practices”
John C. Redding was quoted on November 5, 2018 in an Auto Finance News article, “Attorneys seek CFPB definition of abusive practices,” which discussed the announcement from the CFPB to define the term “abusive” in the Dodd-Frank Act. The article stated, “The Consumer Financial Protection Bureau has...
In The NewsNew Jersey appeals court says choice-of-law exception may apply in interest rate class action suit
On October 9, the Superior Court of New Jersey Appellate Division reversed a trial court’s decision to revive a proposed class action that challenged, among other things, interest rates of over 30 percent on car title loans. According to the appellate court, the trial court dismissed the case...
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
FYI
John C. Redding discussed "Navigating the impending regulatory changes" during the Auto Finance Performance and Compliance Summit
Recent Blog Posts
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February 15, 2019
7th Circuit vacates class decertification decision in auto finance lawsuit
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February 1, 2019
Used car dealership fined $3 million by New York City for deceptive practices
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December 21, 2018
New Jersey appellate court finds arbitration provision ambiguous and unenforceable
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November 28, 2018
Auto lender pays $11.8 million to resolve investigation into add-on product and loan extension program
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November 7, 2018
7th Circuit affirms summary judgment for repossession company, holds property-retrieval fee is not subject to FDCPA