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The CFPB provided an exemption from the Small Dollar Rule for “certain purchase money security loans.” Specifically, the Rule does not apply to credit extended for the“sole and express purpose of financing a consumer’s initial purchase of a good, when the credit is secured by the property being purchased, whether or not the security interest is perfected or recorded.”In other words, if a consumer receives credit for the express purpose of purchasing a car, the car secures the transaction, and the amount financed is approximately equal to, or less than the cost of acquiring the car, then the transaction is excluded from the Rule. However, there are two important limitations on this exemption: financing ancillary products, and refinancing a purchase money transaction. Concerning ancillary products, the CFPB noted that the purchase money exemption does not encompass“ancillary products that are being sold along with a vehicle,”but“are not themselves the good in which the lender takes a security interest as a condition of the credit.”Therefore, financing an ancillary product along with a car could mean that there’s no purchase money exemption for the transaction, if the transaction otherwise meets the definition of a “covered loan.” Additionally, the CFPB expressly states in the commentary accompanying the Rule that the purchase money exemption does not extend to refinances of purchase money credit. Therefore, if an auto finance transaction involves ancillary products or refinancing, then it could be covered by the Rule if the (i) term is 45 days or less, (ii) transaction has a balloon payment, or (iii) APR is over 36% and the transaction includes a leveraged payment mechanism. Note that, besides the purchase money exemption, the Rule also contains an “accommodation” exemption for loans made by a lender who makes 2,500 or fewer covered short‐term or balloon payment loans per year and derives no more than 10% of its receipts from such loans. As a result, some sellers of motor vehicles may be permitted to engage in a “de minimis” volume of covered loans, without application of the Rule’s requirements to such loans. You should seek advice of counsel to determine whether the Rule applies to your transactions. OFAC The USA Patriot Act, administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), mandates that no U.S. person (including auto dealers) can do any business — cash or credit —with persons or entities included on OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List). These are lists of persons or entities suspected of being associated with or funding terrorist organizations and other criminal enterprises. The list is frequently updated although a searchable version of the list is published on OFAC’s website, http://www.treasury.gov/ofac/downloads/sdnlist.txt. For compliance with the USA Patriot Act, you must run all of your customers – both cash and credit – against the SDN List (including the names of any individuals who directly or indirectly own 50% or more of any entity that is a party to a new transaction). You should also run service and parts customers who make unusual orders (e.g., high quantities of materials that could be used in making an explosive device) or who otherwise seem suspicious. You may conduct the search online yourself, or you can purchase a product from a credit bureau or an identity verification service to systematically check a customer against the current SDN List. If you get a preliminary match, OFAC lists a series of steps to determine if you have a truematch or a false positive. If you believe you have a true match after following those steps, you must call OFAC at their designated number, and

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205 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE