By Thomas B. Hudson and Nicole F. Munro

Here’s our monthly article on legal developments in the auto sales, finance and leasing world.  This month, the action involves the Bureau of Consumer Financial Protection and the Federal Trade Commission.  As usual, this month’s article features our “Case of the Month.”

Note that this column does not offer legal advice.  Always check with your lawyer to learn how what we report might apply to you, or if you have questions.

This Month’s CARLAWYER© Compliance Tip

Note the Federal Trade Commission enforcement action described below dealing with mailing fake recall notices.  The FTC settlements include both the dealer and the promotions company.  The lesson for dealers from this action is clear – vendors can get you into trouble.  Before you sign up for that next ad campaign, do your due diligence and have your lawyer review the contract.  Hint – the time for those actions is BEFORE you sign up.  You should also have a vendor management process in place to ensure the activities of your vendors on your behalf comply with the law.

Federal Developments

 Fake News!  On October 10, the FTC announced that a group of car dealerships and their president and vice president have settled allegations that they mailed more than 21,000 fake “urgent recall” notices to consumers to lure them to visit dealerships. The FTC also has agreed to a settlement with a California-based marketing firm and its owner that, according to the complaint, designed the fake recall notices and worked closely with the dealerships to send them.  According to the FTC, the vast majority of the vehicles covered by the notices did not have open recalls. The court orders settling the FTC’s charges bar the defendants from such deceptive conduct in the future.

The dealerships do business as Passport Toyota, Passport Nissan of Alexandria, Virginia, and Passport Nissan of Marlow Heights, Maryland. The marketing company, Temecula Equity Group, LLC, does business as

Se habla español.  On October 15, the Bureau released an updated and expanded glossary, prepared in cooperation with other federal agencies, that contains an extensive list of common financial terms translated into Spanish.  The glossary is supposed to help financial service providers, financial educators, government agencies, and other organizations effectively communicate with consumers with limited ability to speak, write, or read English.  Use of the glossary is not mandated, nor is it guidance or a requirement for any stakeholder.  The Bureau uses the glossary to ensure consistency as it translates consumer education materials from English to Spanish.  If you use an ad company, make sure to send it a copy of the glossary.  If you do ads in-house, you’ll need a copy, as well.

Complain, Complain, Complain!  On October 23, the Bureau released its “Complaint Snapshot” a 50-state report, illustrating complaints reported by people in all 50 states and the District of Columbia. The Bureau says it received more complaints from California consumers than from any other state, followed by Florida, Texas, New York, and Georgia.  Florida consumers complained most often about credit or consumer reporting, while Texas consumers beefed (sorry, couldn’t resist) the most about debt collection.  Wyoming consumers complained the least.

“Small-Dollar” Rules Revisited.  On October 26, the Bureau stated that it expects to issue proposed rules in January 2019 that will reconsider the Bureau’s rule regarding Payday, Vehicle Title, and Certain High-Cost Installment Loans, issued by the Bureau in October 2017.  The Bureau is planning to revisit only the ability-to-repay provisions of the rule and not the payments provisions, in part because the ability-to-repay provisions “have much greater consequences for both consumers and industry than the payment provisions.”  The Bureau will also address the compliance date for the rule, currently August 19, 2019.  The Bureau noted that it will make final decisions regarding the scope of the proposal closer to the date of issuance of the proposed rules.

Big Federal Privacy Shindig.  The FTC recently announced that it is accepting presentations for its fourth annual PrivacyCon, to be held on June 27, 2019.  PrivacyCon addresses the latest research and trends related to consumer privacy and data security.  The call for presentations seeks empirical research responding to several questions, including: (1) What new privacy and security issues arise from emerging technologies such as the Internet of Things, artificial intelligence, and virtual reality? (2) What are the greatest threats to consumer privacy today? (3) How can one quantify the costs and benefits to consumers of keeping data about them private? (4) What are the incentives for manufacturers and software developers to implement privacy and security by design in their goods or services and keep security up to date? (5) Is there evidence that the market can provide efficient levels of privacy and data security?


Case of the Month

Odometer Act Claim Against Dealer Failed Where Buyer’s Vehicle Was Exempt from Act’s Disclosure Requirements and Dealer Did Not Waive Exemption.  In March 2018, a buyer bought a 2008 GMC Yukon with an odometer reading of 138,616 miles from a dealership. The dealership provided the buyer with two documents showing that the mileage was 138,616, but the bill of sale stated, “Odometer Reading: EXEMPT.”

Almost immediately after buying the vehicle, the buyer had problems and was told by the dealership that the vehicle needed extensive repairs.  When the buyer took the vehicle to get a trade-in valuation, he received a title report showing that, in November 2014, the odometer reading was 199,689 and that, in September 2015, the odometer reading was 98,000.

The buyer sued for violations of the federal Odometer Act.  The dealership moved to dismiss, arguing that the Act and regulations expressly exempt vehicles manufactured 10 years before the date of sale.  Because the buyer bought the vehicle in March 2018, more than 10 years after its January 2008 manufacture date, the dealership was not required to disclose the vehicle’s mileage.

The buyer argued that even though the dealership did not have a legal obligation to disclose the odometer reading, because it voluntarily disclosed the vehicle’s mileage to him and his lender in two documents provided at the sale, the odometer disclosure must be truthful and accurate.  The federal trial court disagreed with the buyer.  The court distinguished a case in which the seller of an RV, exempt from the odometer disclosure requirements, disclosed the odometer reading to the buyer in an Odometer Disclosure Statement and a Buyer’s Order.  In this case, no such statements were made, and, as noted by the court, the bill of sale specifically stated “EXEMPT” next to the odometer reading.  Because the vehicle was exempt from the odometer disclosure requirements in the Odometer Act and the dealership did not waive that exemption in documents it provided to the buyer, the court concluded that the Odometer Act claim failed.  See Tirtel v. Sunset Auto & Truck, LLC, 2018 U.S. Dist. LEXIS 173222 (M.D. Fla. October 9, 2018).

So, there’s this month’s roundup!  Stay legal, and we’ll see you next month.


Tom ( is Of Counsel and Nikki ( is a Partner in the law firm of Hudson Cook, LLP.  Tom has written several books and is the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers.  He is the CEO of, LLC and the Senior Editor of’s CARLAW®, a monthly report of legal developments for the auto finance and leasing industry.  Nikki is Editor in Chief of CARLAW®, a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery®. For information, visit © 2018, all rights reserved. Single publication rights only, to the Association. (11/18).  HC 4812-7784-4346.

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