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That is why the presumption should be in favor of the market and the onus should be on government to demonstrate it can improve the status quo. For consumer protection policy specifically, the Bureau generally seeks to empower consumers to make the best decisions for themselves. And in developing such policies we start from the presumption that with timely and understandable information, consumers will be empowered to make decisions in their best interests. A common complaint about the CFPB has been that it uses its UDAAP authority to regulate by enforcement. Director Kraninger’s comments suggest that the agency is heading in a new direction – one that may make regulated entities less concerned. Again, the CFPB does not have authority to enforce “abusive” trade practice violations against franchised auto dealers but the same conduct that the CFPB would consider to be “abusive” may support a private UDAP action under state law. Honesty and transparency in the sales and F&I processes are perhaps the best defense to a claim of an unfair or abusive practice. Section 1042 of Dodd-Frank extends this UDAP enforcement authority to State Attorneys General and other regulators. Already, several State AGs have brought civil actions involving creditors other than auto dealers. The FTC and BCFP signed a memorandumof understanding in December 2012 to share information and coordinate their supervisory and enforcement efforts among their respective regulated entities. The FTC partnered with 32 law enforcement agencies in the U.S. and Canada to implement Operation Ruse Control, a crackdown on perceived deception and fraud in auto sales. Collectively, they brought over 185 actions against auto dealers. Both the FTC and the CFPB have signed similar memoranda of understanding with State Attorneys General. Note that despite the fact that the BCFP has slowed somewhat in its use of UDAAP as an enforcement tool, the FTC continues to exercise its UDAAP authority, and in novel ways. Recently, the FTC charged a dealership group with falsifying consumers’ income and down payment information on vehicle financing applications and misrepresenting financial terms in vehicle advertisements.This is the first time the FTC has brought such an income falsification claim. In addition, the FTC continues in its more traditional pursuits of advertising and disclosure violations, including recall notices used a tool to increase business. In fact, in a recent public statement, the FTC warned consumers about fake recall notices from car dealerships and provided tips for checking the veracity of such notices. State UDAP Laws State UDAP laws are not uniform and a number of states apply different tests for “unfairness” or “deception” than does the FTC. Many enumerate specific practices deemed to be unfair. Others use differing standards that include: (1) whether the practice, even if not previously considered unlawful, offends public policy under any state authority; (2) whether it is unconscionable, unethical, immoral, oppressive, or unscrupulous; and (3) whether it causes substantial injury to consumers. In particular, state standards for“unfairness”may include a lower threshold for liability than the FTC’s “unfairness”standard. Many state UDAP laws also cover Internet or out-of-state transactions if a resident of the state is adversely affected.

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181 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE