The CARLAWYER© Jan2020



By Nicole F. Munro and Thomas B. Hudson 


Happy new year!  We hope that you had a great holiday, and that the upcoming year is good to you.  As is the case in most years during the holidays, the federal regulators were taking time off for shopping and family, so our docket isn’t crowded this month.  


Here’s our monthly article on selected legal developments we think might interest the auto sales, finance, and leasing world.  This month, the action involves the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Department of Justice.   As usual, our article features the “Case of the Month” and our “Compliance Tip”.


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.


Federal Developments


The CFPB and the FTC have extended the deadline to submit comments on issues affecting the accuracy of traditional consumer credit reports as well as employment and tenant background screening reports. The new deadline is January 31, 2020. 


On December 18, the CFPB issued a report to Congress describing the Bureau’s and other agencies’ enforcement actions and required reimbursements to consumers by supervised institutions related to the Truth in Lending Act, the Electronic Fund Transfer Act, and the Credit Card Accountability Responsibility and Disclosure Act and their respective implementing regulations. The report also gives an assessment of the extent to which compliance with TILA and EFTA, and their implementing regulations, has been achieved. 


On December 9, the CFPB released a special edition of Supervisory Highlights focusing on its examinations of consumer reporting companies and furnishers of information to consumer reporting companies to determine compliance with the Fair Credit Reporting Act and Regulation V. Furnishers covered in the report include banks, mortgage servicers, auto financing servicers, student loan servicers, and debt collectors.


On December 3, the FRB, CFPB, FDIC, NCUA and the OCC issued an interagency statement on the use of alternative data in credit underwriting by banks, credit unions, and non-bank financial firms. The statement highlights potential benefits and risks of using alternative data in underwriting. For purposes of the statement, alternative data means information not typically found in consumers’ credit files with the nationwide consumer reporting agencies or customarily provided by consumers as part of credit applications. The statement explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.


On November 20, the CFPB published its Fall 2019 rulemaking agenda. The agenda lists regulatory matters the Bureau reasonably anticipates having under consideration from October 1, 2019, to September 30, 2020.


On October 30, the CFPB and the FRB announced that they are increasing the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. The Dodd-Frank Act provides that the dollar amount thresholds for TILA and the CLA must be adjusted annually by any annual percentage increase in the consumer price index. Because there was an annual percentage increase in the consumer price index as of June 1, 2019, the protections of TILA and the CLA generally will apply to consumer auto finance and lease transactions of $58,300 or less in 2020.


Case of the Month

This month we feature a case that illustrates a problem we’ve described in earlier articles – dueling arbitration clauses.  

A car owner traded in his old car and leased a new one from a dealership. The car owner sued the dealership, alleging various state law claims arising from an undisclosed fee he was charged in connection with paying off the lien on the car he traded in. 

The dealership moved to compel arbitration under an arbitration provision in the parties’ lease agreement. The trial court granted the motion, but the Superior Court of New Jersey, Appellate Division, reversed, finding that the arbitration provision was vague and unenforceable. 

The dealership then moved to compel arbitration under an arbitration provision in the parties’ motor vehicle retail order. The trial court denied the motion, finding that the arbitration provisions in the lease agreement and the retail order conflicted with one another and were, therefore, unenforceable. The trial court added that the dealership waived its right to arbitration under the arbitration provision in the retail order because it did not rely on that provision when it filed its first motion to compel arbitration. 

The appellate court affirmed. First, the appellate court noted that it agreed with the trial court that the dealership waived its right to assert the retail order’s arbitration provision by failing to invoke that provision in its first motion to compel arbitration and by waiting over a year to assert that provision, a delay that prejudiced the car owner. 

The appellate court also agreed with the trial court that the conflicting terms in the two arbitration provisions, including terms addressing the ability to pursue claims in court, the venue of an arbitration proceeding, the scope of the claims covered, and whether the arbitrator or the court has the power to decide the validity and scope of waiver of class action rights, rendered each arbitration provision unenforceable. 

If the forms you ask your customers to sign include multiple arbitration agreements, time for another lawyer visit.

See Trout v. Winner Ford, 2019 N.J. Super. Unpub. LEXIS 2440 (N.J. Super. App. Div. December 3, 2019).


This Month’s CARLAWYER© Compliance Tip


Okay, it’s January.  What better time to blow your whistle and run a compliance drill.  Hold a meeting of your Compliance Officer, your Red Flags Officer and your Privacy Officer and go over your dealership’s compliance program for the upcoming year.  First, you’ll determine whether the people who were appointed to those positions are still employed by the dealership, then you can discuss continuing training for each officer’s area of specialty and the budget allocation for each officer’s area of responsibility (remember – no budget allocation for compliance usually means no compliance).  Finally, each officer can be tasked with the development of a 2020 compliance plan for his or her area of responsibility. Sound like a plan?


So, there’s this month’s article. See you next month!



Nikki ( is a Partner in the law firm of Hudson Cook, LLP., Editor in Chief of’s CARLAW®, a contributing author to the F&I Legal Desk Book and a frequent writer for Spot Delivery,® a monthly legal newsletter for auto dealers  Tom ( is Of Counsel to the firm, has written several books and is a frequent writer for Spot Delivery®.  He is the Senior Editor of CARLAW®.   For information, visit © 2020, all rights reserved. Single publication rights only, to the Association. 



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