In the Absence of the CFPB Don’t Forget About the FTC
Following Director Richard Cordray’s exit last month, the Consumer Financial Protection Bureau has been the predominant topic of discussion in the workforce compliance world. Questions abound: Who has rightful authority as Cordray’s successor—acting director Mick Mulvaney or deputy director Leandra English? Where would each potential leader steer the agency? Will efforts to roll back or repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act succeed? And in response to all this uncertainty, should financial services companies start adjusting their compliance programs or stay the course?
While we can’t answer the first three questions, a recent news story suggests that any shift in policies and procedures may be premature. The CFPB might be changing, but consumer protection has not. Don’t forget: there’s more than one regulatory agency out there. CFPB or no CFPB, you can’t afford to ignore the Federal Trade Commission.
Officials said a southern California-based dealership group will pay $1.4 million to settle FTC charges that it violated a 2014 administrative order prohibiting the company from misrepresenting how much consumers could pay to finance or lease a vehicle.
The proposed court order resolving the FTC’s complaint against the dealership bars similar advertising misrepresentations and imposes strict compliance and reporting terms to prevent future violations.
According to the FTC’s first complaint, the defendants made a variety of misrepresentations in advertisements to consumers that violated the FTC Act, falsely leading consumers to believe they could buy vehicles for specific low prices, finance vehicles for specific low monthly payments and/or make no upfront payment when leasing.
Specifically, the FTC charged the dealership with deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised price excluded substantial fees and other costs. The ads also allegedly violated the Consumer Leasing Act (CLA) by failing to disclose certain lease related terms. One of the dealerships’ ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit-related terms.
The FTC has regulated the consumer finance industry since before the passage of Dodd–Frank, and it’s not alone: the Department of Justice and various state regulators also enforce Fair Lending laws. As we wrote back on this blog in June, regulatory bodies are like the armed forces: if the FTC is the US Army, the CFPB is a specialized division of the Army (think airborne or armored divisions).
Read more about why it’s shortsighted to assume that compliance lives and dies with one agency.
