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 only the Consumer Financial Protection Bureau. As usual, this month’s article features our “Compliance Tip” and 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
Does your website meet the requirements of the Americans With Disabilities Act? If hearing that question made you spill your coffee – if you haven’t given that topic any thought – you should know that a number of dealers around the country have been threatened with ADA litigation over the ability of disabled persons to use the dealers’ websites. Perhaps it’s lawyer time?
Bureau’s UDAP Authority is Alive and Well. On January 3, the Bureau announced that it reached a consent order with USAA Federal Savings Bank for allegedly (1) violating the Electronic Fund Transfer Act and Regulation E by failing to honor consumers’ requests to stop payment on preauthorized electronic fund transfers and by failing to initiate and complete adequate error resolution investigations when consumers contested incorrect or unauthorized electronic fund transfers, and (2) engaging in unfair acts and practices by reopening deposit accounts consumers had previously closed without seeking prior authorization or providing adequate notice. The consent order requires USAA to, among other things, provide approximately $12 million in restitution to affected consumers and pay a $3.5 million civil penalty.
Looking for Authority. On January 17, new Bureau Director Kraninger announced that she has asked Congress to grant the Bureau clear authority to supervise for compliance with the Military Lending Act. The Bureau sent its legislative proposal to Speaker Pelosi and Vice President Pence (in his capacity as president of the U.S. Senate), with copies to the chairs and ranking members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.
And Another Report. On January 24, the Bureau’s Office of Servicemember Affairs released its annual report. The OSA monitors and analyzes complaints from servicemembers, veterans, and military families about consumer financial products or services, credit reporting, and debt collection, among other issues facing servicemembers in the financial marketplace. The report provides an analysis of those complaints and discusses perceived emerging issues and trends in the financial marketplace that affect servicemembers, educational initiatives, and the OSA’s coordination with other federal and state agencies.
Enforcing Void Loans? The Bureau settled last week with several payday lenders and corporate officials based in Canada and Malta for allegedly violating the Consumer Financial Protection Act of 2010. The CFPB alleges they misrepresented to consumers that they were obligated to repay loans in states where the loans violated state licensing or usury laws and state law voided the loan. The loans were also illegally conditioned on irrevocable wage assignment clauses, which the CFPB alleges violates the Credit Practices Act.
Case of the Month
A consumer bought a new boat from a boat dealership. The purchase agreement signed by the consumer provided that he was buying the boat “as is,” with no warranties by the dealership. After numerous issues with the boat’s carbon monoxide alarm, generator, and port engine as well as a fuel leak, the consumer sued the dealership for violating the Deceptive Trade Practices Act, breach of contract, negligence, and gross negligence. The dealership moved for summary judgment, arguing that the consumer’s claims failed because he bought the boat “as is.” The trial court granted the dealership’s motion, and the Court of Appeals of Texas affirmed. The appellate court noted that the “Texas Supreme Court has held that, generally, an ‘as is’ clause will defeat the element of causation in DTPA, fraud, and negligence claims.” In this case, the appellate court rejected the consumer’s argument that the “as is” provision was concealed. The appellate court found that the provision was printed in bold and capitalized typeface on the back page of a 2-page agreement. Moreover, the consumer signed the first page of the agreement directly below language telling him to see the reverse side for important information regarding limitation of warranties. The appellate court added that the consumer’s failure to read the document was not a defense. Finally, the appellate court noted that there was no evidence that the dealership was aware of and attempted to conceal the boat’s defects. See Juda v. MarineMax, Inc., 2018 Tex. App. LEXIS 10640 (Tex. App. December 20, 2018).
So, there’s this month’s roundup! Stay legal, and we’ll see you next month.
Tom (firstname.lastname@example.org) is Of Counsel and Nikki (email@example.com) 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 Senior Editor of CounselorLibrary.com’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 www.counselorlibrary.com. © CounselorLibrary.com 2019, all rights reserved. Single publication rights only, to the Association.. HC 4829-1089-6519.1.