Welcome!

News Feed Item

Former CFPB Assistant Director Rick Hackett reveals eight secrets for buy-here-pay-here dealers to avoid the regulatory radar

Hackett, who focused on auto lending regulation during his CFPB tenure, is now partner at industry law firm Hudson Cook and will deliver a keynote address at the 7th annual Innovate conference, hosted by AutoStar Solutions.

FORT WORTH, Texas, Aug. 15, 2014 /PRNewswire/ -- Rick Hackett, former Consumer Financial Protection Bureau assistant director and current partner at Hudson Cook, today advised buy-here-pay-here auto dealers of eight specific steps they must take to stay off the radar of government regulators.

"As the CFPB and its allies in state attorney general offices turn increasing focus to 'high-priced' credit for nonprime consumers, it's important for dealers of all types – and especially for independent dealers with buy-here-pay-here operations – to proactively plan for outreach from regulators," said Hackett, who will share more compliance-related insight in a Q&A-style keynote address at the Innovate 2014 industry conference, hosted by AutoStar Solutions.

"It's hard enough as it is to run a nonprime credit dealership, with wholesale inventory prices inflated and consumer incomes stagnant," Hackett said. "Now federal regulators and state attorneys general have decided they have the power to declare when a seller's price is 'inflated to hide the true cost of credit provided.' The result is an automatic truth-in-lending violation and a claim of unfair and deceptive practices."

Hackett said no surefire way exists for dealers to completely protect themselves from a regulator who can decide what a reasonable price is. But he recommends these steps to minimize exposure:

  1. If a car buyer is paying cash, never sell (or even offer to sell) a vehicle for a lower price than what you charge when the customer finances. If the financed price is higher, regulators may conclude you added an undisclosed finance charge. You may also be in violation of usury laws.
  2. Get your house in order when it comes to technical disclosures. This includes the Truth in Lending Act, adverse action notices, as well as compliance with privacy laws and Article 9 of the Uniform Commercial Code.
  3. Train your F&I managers, just like you train your mechanics. The world of F&I has become incredibly complicated, so mere hope is not a viable strategy. You must invest in education and training – and be able to demonstrate to regulators that you've done so.
  4. Underwrite for the borrower's ability to pay, rather than focusing solely on the collateral value. You'll prevent accusations of predatory lending while still protecting your financial interests.
  5. Treat your complaints as a resource, and remember they can come back to bite you. Do you receive multiple complaints about the same salesperson? Have your collectors been accused more than once of the same illegal practice? Take note of the trend – and fix it – before the regulators do it for you.
  6. Work with troubled borrowers, and try your best to keep them in their cars. Premature repossession only reinforces the appearance of predatory lending.
  7. Proactively manage your repo agents and all other vendors. Do you know whether your repo agent has been sued, has any judgments against him, or is the subject of BBB complaints? Has he been trained by a recognized recovery compliance organization? Is your cleaning service bonded and insured? Do they conduct thorough background checks? If you outsource collections, does the agency adhere to all applicable laws, have all necessary licenses, and receive adequate training? Are your vendors' procedures similar to your own? It may seem overwhelming, but regulators hold dealerships responsible for who they do business with.
  8. Approach ancillary products carefully. Don't sell the customer options they can't afford. And make it clear that these items are truly optional. If every buyer leaves your lot with the same aftermarket products, regulators may conclude that you require them for financing.

Hackett will deliver one of six featured keynotes on the automotive and buy-here-pay-here industries at the 7th annual Innovate conference, Sept. 21 through Sept. 24 at the Gaylord Texan Resort & Convention Center in Grapevine, Texas. Innovate will be hosted by AutoStar Solutions, a leading provider of enterprise-level software to subprime auto lenders, as well as independent retail and buy-here-pay-here dealers.

Attendees can choose from a wide variety of classes in 10 different tracks, including compliance and technology. AutoStar expects more than 500 attendees at this year's conference, in addition to major exhibitors and financial institutions that will showcase the latest dealership technology, best practices and industry solutions.

To register, visit http://innovate.autostarsolutions.com, where users can build and save their own customized event schedule. Those who would rather go mobile can tailor their schedules with the Guidebook app, available at http://guidebook.com/g/innovate2014. AutoStar is offering a $50 off early bird special to all attendees registered before Aug. 31.

About AutoStar Solutions
For over 20 years, AutoStar Solutions has provided dealer management software solutions to independent automotive dealers and subprime finance companies located in the United States. Their web-based software solutions have enabled clients to automate and simplify activities while staying compliant with state and federal regulations. Learn more at www.autostarsolutions.com.

SOURCE AutoStar Solutions

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
With more than 30 Kubernetes solutions in the marketplace, it's tempting to think Kubernetes and the vendor ecosystem has solved the problem of operationalizing containers at scale or of automatically managing the elasticity of the underlying infrastructure that these solutions need to be truly scalable. Far from it. There are at least six major pain points that companies experience when they try to deploy and run Kubernetes in their complex environments. In this presentation, the speaker will d...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
When building large, cloud-based applications that operate at a high scale, it's important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. "Fly two mistakes high" is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Le...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
CI/CD is conceptually straightforward, yet often technically intricate to implement since it requires time and opportunities to develop intimate understanding on not only DevOps processes and operations, but likely product integrations with multiple platforms. This session intends to bridge the gap by offering an intense learning experience while witnessing the processes and operations to build from zero to a simple, yet functional CI/CD pipeline integrated with Jenkins, Github, Docker and Azure...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Dhiraj Sehgal works in Delphix's product and solution organization. His focus has been DevOps, DataOps, private cloud and datacenters customers, technologies and products. He has wealth of experience in cloud focused and virtualized technologies ranging from compute, networking to storage. He has spoken at Cloud Expo for last 3 years now in New York and Santa Clara.
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Containers and Kubernetes allow for code portability across on-premise VMs, bare metal, or multiple cloud provider environments. Yet, despite this portability promise, developers may include configuration and application definitions that constrain or even eliminate application portability. In this session we'll describe best practices for "configuration as code" in a Kubernetes environment. We will demonstrate how a properly constructed containerized app can be deployed to both Amazon and Azure ...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.