Regulatory Update:Where Do We Stand?Regulatory Update:

Where Do We Stand?

Lewis D. KuhlAttorney at Law

Kurkin Forehand Brandes LLP

Regulatory FrameworkRegulatory Framework•Dodd Frank Act•The Magnuson-Moss Warranty Act•FTC Act and Regulations•State Warranty and VSC Acts and Regulations•State Insurance Regulations•State UDAP Acts•State Lemon Laws•State UCC’s•State MVRISA’s•State Attorneys General

Product TerminologyProduct Terminology• Retail Installment Sales Contract (RISC) vs. Loan• GAP Waiver vs. GAP Insurance• Warranty vs. Service Contract• Insurance vs. Non-insurance Terms

– Coverage vs. Contract Terms– Premium vs. Enrollment Charge/Purchase Price– Contract vs. Policy

Dodd Frank ActDodd Frank Act• Creates the Consumer Financial Protection Bureau (CFPB)• Exempts some motor vehicle dealers• Rulemaking/enforcement of consumer laws (TILA, ECOA,

FCRA, FDCPA, GLB)• Consumer Financial Products• Covered Person – any person providing a consumer

financial product (banks, credit unions, captive and independent finance companies)

• Regulation of Supplemental Products• Unfair and Deceptive Acts and Practices• Continuing to evolve – stay tuned – reg’s on F&I products

Magnuson Moss Warranty ActMagnuson Moss Warranty Act

• Requires manufacturers and seller to provide consumers with detailed information about warranty coverage

• Does NOT require a written warranty – if in writing must comply with the Act

• Does NOT apply to oral warranties• Applies to consumer goods – not services• Dealer provided warranty• Used Car Buyer’s Guide is not a warranty• Lifetime Warranties. Seller is obligor. Tie in sales provisions

not allowed unless product or service required to make product work, FTC prior approval or free of charge

PrivacyPrivacy• Part I - Privacy Rule

– privacy notices - opt out rights - limits use and disclosure of nonpublic financial information

– Affiliate – Non-Affiliate issue• Part II - Safeguards Rule

– mandates security and protection of nonpublic financial information

– Includes service providers - contract• Revised Privacy Notice• State Data Security Laws• Impacts VSC Administrators• Recent Enforcement Actions

Fair Credit ReportingFair Credit Reporting• Governs the use of consumer’s credit information• Regulates “firm offer of credit”• “Permissible purpose” to pull credit• Document Disposal rules• Risked Based Pricing• FCRA Privacy Notice• Dealer miss programs• Direct to Consumer

Equal CreditEqual Credit• The purpose of the ECOA is to promote the availability of credit

to all creditworthy applicants without regard to:– Race– Age (provided the applicant is of legal age)– Sex– Color– National Origin– Religion– Marital Status– Income Derived from Public Assistance

• Concern is with the offering of supplemental products to all.

Truth in LendingTruth in Lending• Reg. Z implements and helps to interpret and understand portions of TILA.• Both TILA and Reg. Z require specific term and cost disclosures in order to

promote the informed use of consumer credit.• Reg. Z also provides a foundation for consumers to compare various credit

costs.• Reg. Z applies to every creditor that extends consumer credit under the

following four conditions:– The credit is offered or extended to consumers– The offering or extension of credit is done regularly– The credit is subject to a finance charge, or is payable in more than four

installments– The credit is primarily for personal, family, or household purposes

• Does not apply if amount financed exceeds $50,000 (now $51,800)

Unfair and Deceptive ActsUnfair and Deceptive Acts• FTC Act• State UDAP Acts• Prohibits unfair and deceptive acts and practices• Enforced by CFPB, FTC and state Attorneys General• Applies to supplemental products sold by dealers – product

disclosure• Payment packing• Advertising – “pay off your trade”• Sale of VSC on car that was not eligible - TX

State Issues and ActivityState Issues and Activity• NY – PDR and Windshield Repair – Filing Price• KY – VSC not insurance – can include in cash price• PA – Removed price cap – can still review/investigate

complaints• OH – clarified that GAP can be on RISC• NE – protection products not insurance – revised form filing• FL – Filing price/Refund guidelines

Other ItemsOther Items• Data Security• Finance Company Approval of Products• Refunds• Licensing of Sales Representatives• Advertising Issues• Merger/Integration• Product Pricing/Forms Filing• Direct to Consumer• VSC and GAP State Model Acts

SolutionsSolutions• Product compliance• Current Forms• Relationship with dealers• Training• Education

QuestionsQuestions

Thank YouThank You

Lewis D. KuhlKurkin Forehand Brandes LLP

Attorneys at Law18851 NE 29th Avenue, Suite 303

Aventura, Florida 33180(305)929-8500

lkuhl@kfb-law.comwww.kfb-law.com