2017 GNYADA Membership Directory

HOT TOPICS

Ruling The court ruled that, among other things, the dealer had violated the Truth in Lending Act by failing to disclose a hidden finance charge – the bank fee based on the consumer’s credit risk. It awarded plaintiff the following: 1. Statutory damages. 2. Punitive damages against the dealer for the dealer’s failure to send an adverse action notice under ECOA. 3. Treble damages. The court treated the dealer’s repossession of the vehicle as a conversion (theft) of property because the consumer had never signed a spot agreement entitling the dealer to cancel the contract, and the consumer was not in default of the RISC when the vehicle was repossessed. 4. Damages under the Uniform Commercial Code (UCC) because the dealer sold the car without giving the plaintiff notice of her potential deficiency liability. 5. Attorney’s fees and court costs. 1. Always have a “permissible purpose” to pull a consumer’s credit report. A signed authorization from the consumer (generally on a credit application) is strongly preferred but not required (except in certain states) when both the dealer and customer understand they are close to completing a credit transaction. Most credit applications, which are usually signed by the consumer, contain language where the consumer agrees that you can access their credit report. Finance sources usually obligate dealers to provide to credit applicants a list of the names and addresses of the finance sources to which the dealer may send their credit application to avoid being deemed a consumer reporting agency under FCRA. 2. Give or send a risk-basedpricingnotice or credit score disclosure exceptionnotice to every applicant for credit. You can obtain the consumer’s credit score and the distribution of credit scores for the scoring model used from a credit bureau, or a third-party source such as Dealertrack. The only exception is for customers who do not have a credit score, and they should receive the FTC notice for consumers without a credit score. Even if you don’t typically pull credit on applicants, you may have to buy a credit score to give the credit score disclosure notice to all credit applicants to meet your obligation to your lenders. Give the notice to the consumer as soon as possible after getting the credit score information necessary to complete the credit score disclosure notice form. Keep a copy in the deal jacket. 3. Send adverse action notices when required. Remember to send an adverse action notice when you decline credit or when unwinding a spot deal, for example. Note that adverse action notices require inclusion of a consumer’s credit score and credit score disclosures including up to four to five key factors that adversely affected the credit score – if the credit score was a factor in the adverse action. 4. Do not charge credit customers higher prices than cash customers on vehicles or aftermarket products. Be prepared to show there is no negative purchase price differential for credit as opposed to cash customers. Use a menu-selling process for aftermarket items to show you consistently offer products to all consumers at the same prices. Complywith Car Buyer’s Bill of Rights and/or other applicable state law requirements for disclosures of aftermarket products. RECOMMENDED PRACTICES

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