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10 Predictions for 2012

The magazine’s legal wiz shines up his crystal ball to offer his predictions on how the CFPB and the FTC will flex their regulatory muscles in 2012.

by Tom Hudson
February 7, 2012
10 Predictions for 2012
4 min to read


This is the time of year when I usually get a number of calls from reporters doing those December or January “predict the future” articles. What they want is for me to offer my prediction for what I think will happen next in the auto sales, finance and lease legal arena.

So, I’ve taken the Windex to the old crystal ball, hoping to peer into the future and predict what 2012 will hold. Readers should be warned that I have a pretty crummy track record when it comes to this exercise. With that in mind, here are my 10 predictions for 2012:

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1. The Consumer Financial Protection Bureau (CFPB) will be close to fully staffed and operational. As it stands, the CFPB has hired everyone not currently employed by Burger King or Wal-Mart, and it’s still hiring. I suspect the bureau will be at nearly full complement by the end of 2012.

2. The CFPB isn’t the only Washington agency with a “Help Wanted” sign on the front door. The Federal Trade Commission (FTC), which has lost several staffers to the CFPB, will be trying hard to hire replacements, but won’t be able to do so quickly enough to be at full strength before mid-year.

3. Even shorthanded, the FTC will initiate the first enforcement actions based on what it heard during its recently completed “Listening Tour,” a series of three roundtables designed to help the agency determine where it should focus its limited resources and new rulemaking powers. After all, the agency can’t very well let a new upstart, the CFPB, hog all of the limelight, can it now? Abusive spot-delivery practices and payment packing will likely be the targets.

4. The CFPB won’t be a “bureau” any more. It will morph, under pressure from Senate Republicans, into a five-member commission, be moved to the Treasury Department and have its funding approved like other federal agencies.

5. We’ll see the first state attorneys general enforcing federal laws and exercising new powers given to them by the Dodd-Frank Act. AGs who have been targeting dealer advertising practices will be among the first ones to deploy these new weapons.

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6. The CFPB will start its study of arbitration, as mandated by the Dodd-Frank Act. It will likely study the issue for quite some time, trying to give the appearance of an evenhanded analysis. Eventually, it will declare pre-dispute mandatory arbitration as something not in consumers’ best interest, and propose a rule that would declare the practice abusive with respect to consumer contracts. Across the country, class action lawyers will celebrate by simultaneously tossing their tasseled loafers into the air.

7. The Department of Justice will bring one or more actions alleging credit discrimination by dealers and finance companies. Based on a recent Supreme Court decision and a few lower court decisions, the DOJ will face a harder time winning these than it would have a couple of years back.

8. Companies financing vehicles for servicemembers will come under intense scrutiny, as the CFPB, without having done any significant fact-finding, appears to be making it clear that it thinks more enforcement and regulation is in order.

9. Larger dealers will begin to significantly ramp up their compliance efforts. The FTC will be on the prowl and will likely target some high-profile dealers in a number of markets. Other dealers will feel the heat, and compliance lawyers won’t go hungry.

10. The added cost of compliance will begin to cause consolidation among smaller dealers, or will simply drive them out of business. Small dealers who have to spread big bucks on compliance across fewer vehicles sold will not be able to compete with the big guys, who can spread similar costs over a much larger operation.

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There you have it — my 10 predictions for the automotive sales, finance and leasing legal world for the next 12 months. Maybe next year we’ll revisit the list and see how I did. However, if you have better predictions, write them on the back of a crisp $100 bill and send them my way.

Thomas B. Hudson Esq. is a partner in the law firm of Hudson Cook LLP and the author of several books, available at CounselorLibrary.com. ©CounselorLibrary.com 2011, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to F&I and Showroom magazine. HC#4850-6985-3451 (12/11).

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