Predictions. Everyone wants them this time of year. And every time I’m asked to write a predictions article, I think about the Yiddish proverb, “Man plans, God laughs,” and I imagine God chuckling over my efforts. But a request is a request, so here are my predictions for 2015.
1. They Aren’t Going Away
George Will recently wrote in the The New York Times about five things Republicans should do with their new majorities. To my surprise, No. 1 on his list was abolishing the Consumer Financial Protection Bureau (CFPB). So my first prediction is that George will (pun intended) be disappointed. We might see the a bit of nibbling around the edges at the bureau and its authority, but it isn’t going away.
2. What Congress Won’t Do, the Supreme Court Might
A more realistic industry victory over the CFPB is possible, but the Supreme Court, not Congress, will deliver it. The Supremes have on their docket a case that has the potential to significantly disarm the CFPB by declaring that the disparate impact theory of prohibited discrimination does not belong in the Equal Credit Opportunity Act. The case actually deals with the Fair Housing Act, but the issues are very similar. And industry lawyers think there’s a good chance this will be a win. So my second prediction is the Supremes will take away one of the CFPB’s most potent weapons.
3. Who Cares About Larger Participants?
We waited for a long time for the bureau to publish its proposed Larger Participant Rule. According to my sources, the bureau was significantly delayed while it tried to work its way around some unfortunate language in the Dodd-Frank Act defining leasing. When the issue was resolved, the proposed rule hit with a thud. Most observers had a pretty good idea which companies would fall inside the larger participant category.
So the impact of the rule — when it becomes final — won’t be who’s in and who’s out. Of much greater importance, I believe, is when the CFPB gains access to all the data maintained by the larger participants, it will slice and dice it in data-mining efforts to come up with additional theories of dealer and finance company liability.
4. Ancillary Products
The bureau is frothing at the mouth over ancillary products. They have expressed concern about the value buyers receive, the fact that some consumers pay more than others for the same product, and the discretion dealers exercise in setting pricing.
That data mining I previously mentioned is likely to come into play here. So my fourth prediction is that we will see enforcement actions by the bureau against finance companies, seeking to indirectly control dealer practices in the sale of these products.
5. BHPH Dealers Will Be Targeted
The bureau also doesn’t seem to care much for buy-here, pay-here dealers. In November, the bureau took its first action against a BHPH dealer, fining DriveTime Automotive Group $8 million for its debt-collection practices and credit reporting. And I don’t think the bureau is done. In fact, prediction No. 5 is we’ll see more enforcement actions against BHPH dealers regarding car pricing and GPS/starter-interrupt usage.
6. R.I.P. Arbitration
It has been several months since the CFPB released its preliminary report on arbitration. A final report is expected to contain the bureau’s recommendations about limiting or prohibiting pre-dispute mandatory arbitration. The preliminary report didn’t dissuade me from my view that the whole study process is nothing but a show trial, so prediction No. 6 is the bureau will prohibit arbitration agreements in consumer transactions.
7. The FTC Will Not Be Hibernating
The folks at the Federal Trade Commission are still peeved at being the weaker regulator, and I believe they will be working hard to create some headlines for themselves. So prediction No. 7 is we’ll see more enforcement actions focused on advertising. We might even get some action on spot delivery practices.
So there are my seven predictions for 2015. Happy New Year, y’all.
Thomas B. Hudson is a partner in the law firm of Hudson Cook LLP and the author of several widely read compliance manuals available at CounselorLibrary.com. ©Counselor Library.com 2014, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to Bobit Business Media. HC# 4851-9548-4960 (11/14).