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Consumer Finance Dealership Compliance

Risk-Based Pricing Rule

Effective January 1, 2011, the FTC’s Risk-Based Pricing Rule imposes a new disclosure requirement on creditors. This new rule was motivated by a concern that, because consumers are entitled to “adverse action” notices under the Fair Credit Reporting Act only when they are denied credit (or reject a counteroffer for credit), consumers are not adequately apprised of the effect credit reports have on the pricing of credit.

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Consumer Finance Dealership Compliance

OFAC & Dealerships

OFAC is a database compiled by the Office of Foreign Assets Control which identifies “Specially Designated Nationals” (SDN) with whom you are prohibited from doing business. The penalties for conducting business with a person or entity listed in OFAC are some of the most severe you face as an auto dealer.

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Dealership Compliance

IRS 8300 Cash Reporting Rule

The IRS 8300 Cash Reporting Rule wins the prize for “Law Most Likely to Get you Thrown in Jail for Inadvertent Non-Compliance”. Unfortunately, unless your staff is well versed in the rule and verifies each customer’s complete transaction history prior to accepting any form of payment, your store probably violates this rule on a monthly basis.

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Dealership Compliance

The Used Car Rule (FTC Buyer’s Guide)

Traveling through Eastern Washington last winter an associate and I were shocked to discover a well-known franchise store violating the Used Car Rule. Bear in mind, this isn’t a small dealer we’re talking about – this is a dealer who owns multiple franchises and has been in business for years. In fact, he wasn’t merely violating the rule in a few instances, from the road I counted 75 used cars for sale that had no Buyer’s Guide – an $875,000.00 violation.

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Consumer Finance Dealership Compliance

Gramm-Leach-Bliley: “Privacy Rule”

The Privacy Rule requires financial institutions to give their customers privacy notices that explain the financial institution’s information collection and sharing practices. In turn, customers have the right to limit some sharing of their information.

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Consumer Finance Dealership Compliance

Gramm-Leach-Bliley: “Safeguards Rule”

The Safeguards Rule requires financial institutions (defined to include dealers who play any part in financing or leasing) to develop and maintain an “information security program” to protect the confidentiality and integrity of personal consumer information.

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Dealership Compliance

Truth in Lending Act – Generally

The federal Truth in Lending Act (TILA) and the accompanying Regulation Z is considered the cornerstone of federal consumer protection laws. For the most part, TILA is simply a disclosure law designed to prevent unscrupulous creditors from preying on consumers. Unfortunately, TILA claims against auto dealers are common and penalties can be steep.