By Greg Johnson. It’s no secret that auto dealerships have become subject to increased regulation over the past several years, primarily in the areas of consumer advertising, consumer finance and consumer privacy. Although the recession of 2007-2009 was primarily related to mortgage financing, regulatory agencies such as the Consumer Financial Protection Bureau (CFPB) (created by the Dodd-Frank Act in 2010), Department of Justice (DOJ), Federal Trade Commission (FTC) and state attorney’s general are focusing on auto dealership financing as well. While the CFPB does not have regulatory authority over auto dealerships, they are exercising indirect authority through their authority over lenders that buy retail installment contracts from dealers. In addition, the CFPB has collected a great deal of information on the dealership industry that they, in turn, share with other government agencies that do have regulatory authority over dealers.

At present, the CFPB is attacking the dealer reserve, where dealerships typically add one percentage point or two to a lender’s wholesale interest rate as compensation for facilitating the indirect financing. The CFPB contends the dealer reserve system has led to unintended lending discrimination and wants to impose a flat fee system. Next up, the CFPB will probably attempt to regulate the pricing of ancillary F&I products sold by dealerships. The CFPB has been collecting data and will likely claim that charges for certain products by some dealerships exceed their value and will attempt, through enforcement actions, to impose retail price caps.

Meanwhile, dealerships must comply with all existing federal, state and local laws and regulations that pertain to the sale and financing of motor vehicles and the non-public, personally identifiable information provided to the dealership by its customers. This is an absurdly large and exceptionally complex task, even for large auto dealerships who employ in-house legal counsel. Below is a list of my top 51 laws and regulations that auto dealerships must thoroughly understand (and should incorporate into their Compliance Management System (CMS)) to avoid liability, whether in the form of consumer litigation or regulatory enforcement actions. Keep in mind that this list is not all-encompassing (it’s only my top 51) and each law or regulation cited has many sub-sections (i.e., even more laws and regulations):

1. Federal Trade Commission Advertising Rules
2. State Advertising Laws & Regulations
3. CAN SPAM Act & FTC E-Mail Rules
4. CAN SPAM Act & FCC Texting (Internet Domain)Rules
5. Telephone Consumer Protection Act & FCC Regulations
6. Federal Trade Commission Texting (Phone) Rules
7. Federal Trade Commission Autodialer Rule
8. Federal Trade Commission Do Not Call Rule
9. Telemarketing and Consumer Fraud and Abuse Prevention Act
10. Federal Trade Commission Telemarketing Sales Rule
11. Deceptive Mail Prevention and Enforcement Act
12. Junk Fax Prevention Act & FCC Regulations
13. Gramm-Leach-Bliley Act (GLBA) & Regulations
14. Federal Trade Commission Privacy (Notice) Rules
15. Federal Trade Commission Privacy (Information Sharing) Rules
16. Federal Trade Commission Information Safeguards Rule
17. Federal Trade Commission Pretexting Provisions
18. FACTA Red Flags Rule (Identity Theft Prevention Program)
19. FACTA Information Disposal Rule
20. Federal Trade Commission Section 5 UDAP Prohibitions
21. Computer Fraud and Abuse Act (CFAA)
22. Electronic Communications Privacy Act (ECPA
23. Driver’s Privacy Protection Act (DPPA)
24. Truth & Lending Act & Regulation Z
25. Consumer Leasing Act & Regulation M
26. State Retail Installment Sales Acts-Disclosure
27. State Retail Installment Sales Acts-Usury
28. Equal Credit Opportunity Act-Discrimination
29. Equal Credit Opportunity Act-Adverse Action
30. Fair Credit Reporting Act-General Provisions
31. Fair Credit Reporting Act-Adverse Action
32. Federal Trade Commission Credit Practices Rules
33. Federal Trade Commission Risk-Based Pricing Rule
34. State Insurance Statutes & Regulations
35. State Service Contract Statutes & Regulations
36. Electronic Funds Transfer Act & Regulation E
37. IRS Form 8300 Cash Reporting Rule
38. USA PATRIOT Act and OFAC Requirements
39. Servicemembers Civil Relief Act
40. Fair Debt Collection Practices Act
41. Uniform Commercial Code (Repossession)
42. State Consumer Fraud Prevention Acts
43. State Unfair & Deceptive Trade Practices Acts
44. Federal Network Security and Data Privacy Laws
45. State Network Security and Data Privacy Laws
46. Federal and State Odometer Acts
47. State Title Branding Laws
48. Federal Trade Commission Used-Car Rule
49. Magnuson-Moss Warranty Act
50. State New Vehicle Lemon Laws
51. State Dealership Licensing Laws & Regulations

This blog is for informational purposes only. By reading it, no attorney-client relationship is formed. The law is constantly changing and if you want legal advice, please consult an attorney. Gregory J. Johnson ©All rights reserved. 2015.