The Industry's Leading Source For F&I, Sales And Technology


Fact or Fiction

June 2013, F&I and Showroom - Feature

by Michael Benoit

It started with a May 2 report posted on the The Wall Street Journal‘s website. Quoting unnamed sources, the report said the Consumer Financial Protection Bureau (CFPB) issued subpoenas to dealers requesting information about ancillary products they sell and how they price them. F&I and Showroom and several other publications followed with their own reports days later.

At the moment, it’s not entirely clear who is issuing these subpoenas, but we don’t necessarily think it is the CFPB. Even the Service Contract Industry Council (SCIC) and the National Automobile Dealers Association (NADA) — organizations that would be in the know — weren’t aware of any CFPB actions related to F&I add-ons when F&I and Showroom magazine contacted them.

If the CFPB was interested in such information, its directors would be more likely to issue a Civil Investigative Demand (CID) or a Request for Information (RFI). The CID is not functionally different from a subpoena, but “subpoena” (in its traditional sense) is not part of the CFPB’s parlance in the initial stages of an investigation or fact-finding mission. In any event, the CFPB has no enforcement power over franchised dealers.

Early on, we were wondering if the news reports were misinformation being disseminated to ratchet up tensions. Now we’re more confused than ever, given the apparent volume of subpoenas dealers are allegedly receiving from federal and state agencies asking that the dealer either appear in a state (other than the one in which he or she operates) to answer questions or produce the entire contents of a deal file.

Our sources say these subpoena forms are coming from federal agencies such as the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco and Firearms, Immigration and Customs Enforcement, and state prosecutors and investigators.

It is entirely possible that the subpoenas are legitimate. Dealers should work closely with their counsel to make that determination and to respond appropriately should they find a given subpoena to be valid. Most litigation attorneys have a good grasp on (or can quickly determine) the requirements for a subpoena from a particular agency or attorney general. If the subpoena is fraudulent, your counsel will know how to deal with that as well.

I’m particularly interested in what’s really going on here, and to the extent I learn anything, I will report on it in upcoming articles.

Most of you who know me generally think of me as being pretty level-headed and pragmatic. More than one client has referred to me as “unflappable.” That said, what most people don’t know about me is that I love a good conspiracy theory. Perhaps it’s because I deal with facts and analysis every day that I look for entertainment in things that are far removed from my daily activities.

Given the CFPB’s known displeasure with franchised dealers for having had the audacity to get themselves excluded from the CFPB’s jurisdictional reach and my love of a good conspiracy theory, I found appealing a colleague’s contention that perhaps the CFPB is using other agencies, state and federal, to harass dealers in ways the CFPB cannot do itself. I’d have found it less appealing were we not in the midst of an IRS scandal over political targeting, but the thought is interesting nonetheless.

Bear with me here, but one of my favorite bits of conspiratorial entertainment is the 1990 BBC production of “House of Cards,” a very smart series that was remade for American audiences this year. The British version focuses on the scandalous and often immoral back-room politics practiced in the British Parliament; in particular, the murderous and conniving Prime Minister Francis Urquhart.

What I love about the show is it feeds every conspiratorial thought and machination that one could come up with in regards to the operation of government, something I find very entertaining.

For the record, I think the CFPB has better things to do than co-opt other agencies into annoying dealers for such a spiteful reason, and I’m certain that such is not the policy or actions of the bureau. But when presented with the idea that the CFPB was somehow behind this, I could not resist responding in true Francis Urquhart fashion: “You might very well think that I couldn’t possibly comment.”

Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. Michael can be reached at Nothing in this article is legal advice and should not be taken as such. Please address all legal questions to your counsel.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  


So Here's the Deal

Ronald J. Reahard
Menus Don’t Work Miracles

By Ronald J. Reahard
A fancy new menu can help streamline processes and improve customer engagement, but it won’t replace the hard-won skill and compassion of a true F&I professional.

Avoiding the AAA Objection

By Ronald J. Reahard
Top trainer advises F&I pros to eliminate the ‘I have AAA’ objection by downplaying the very real — but relatively minor — roadside assistance benefit included with most service contracts.

(Video) Capture Missed VSC Sales

By Ronald J. Reahard

The Dealer Moved My Goal Posts

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Car Buyers Need F&I

By Gregory Arroyo
Current market trends are playing right into the F&I product pitch, but they also reveal trouble ahead for the automotive retail industry at large.

Protecting F&I’s Future

By Gregory Arroyo
The editor responds to a reader’s question about whether F&I managers are being replaced by iPads and digital retailing tools.

Game Almost Over

By Gregory Arroyo

The Repair Is Covered

By Gregory Arroyo

Mad Marv

Marv Eleazer
'We Never Buy This Stuff'

By Marv Eleazer
Every F&I pro gets the occasional ‘F’ customer, but they’re a small part of your business and they’re not worth a minute of mental anguish.

Stop Painting Dealers With a Broad Brush

By Marv Eleazer
His Madness has a few choice words for media members who obsess over every act of dealer malfeasance while ignoring their charitable and volunteer efforts.

I Love F&I. How About You?

By Marv Eleazer

Is That Legal?

By Marv Eleazer

On the Point

Jim Ziegler
Bound to Fail

By Jim Ziegler
Da Man returns with a message to vehicle manufacturers jumping into the subscription waters: It ain’t gonna happen.

Sharpen Your Survival Skills

By Jim Ziegler
‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

Sales Rock Stars Still Exist

By Jim Ziegler

The New Stooges

By Jim Ziegler