New FTC leadership arrives as Simons returns


New leadership officially took control of the Federal Trade Commission.

Earlier this week, Joseph Simons was sworn in as chairman of the FTC.

President Trump named Simons, a Republican, to a term on the commission that expires Sept. 25, 2024, and designated him as chairman.

Simons was confirmed by the U.S. Senate on April 26.

“It is a great honor to lead the FTC, an agency that plays a key role in protecting American consumers and promoting competition in the U.S. economy,” Simons said. “I want to express my gratitude to acting chairman (Maureen) Ohlhausen for her outstanding work as head of the commission for the last 15 months, and for her continued service as a commissioner. I am excited to work with such an accomplished group of incoming commissioners, as well.”

Simons noted that, under Ohlhausen’s leadership, the FTC continued vigorous competition and consumer protection enforcement, including in the high tech and health care arenas. The agency brought more than 18 privacy and data security cases, including Lenovo, V-Tech and Ashley Madison.

Ohlhausen also strengthened the agency’s understanding of informational injuries and advocacy for occupational licensing reform through the development of her signature economic liberty initiative and furthered many process and regulatory reforms.

In addition to Simons, the Senate confirmed four others who were nominated by Trump to serve as commissioners. Three of them, Republican Noah Phillips, and Democrats Rebecca Kelly Slaughter and Rohit Chopra, are expected to be sworn in later this week.

The fourth, Republican Christine Wilson, was appointed to fill the seat currently held by Ohlhausen, and she will take office when Ohlhausen leaves the agency.

Prior to becoming FTC chairman, Simons was a partner and co-chair of the Antitrust Group at the law firm of Paul, Weiss, Rifkind, Wharton & Garrison.

Simons has held two previous positions at the commission. He served as director of the FTC’s Bureau of Competition between 2001 and 2003, during which he was responsible for overseeing the re-invigoration of the FTC’s non-merger enforcement program.

In an earlier stint at the commission in the 1980s, Simons served as the FTC’s Associate Director for Mergers and the Assistant Director for Evaluation. Simons earned the FTC’s Award for Meritorious Service.

FTC continues fight against illegal phone calls


While phone calls remain an important tool for collectors and skip-tracers at auto finance companies, the Federal Trade Commission told the U.S. Senators last week that the agency “is using every tool at its disposal to fight” illegal robocalls.

Appearing at a hearing hosted by the Senate Committee on Commerce, Science and Transportation, Lois Greisman, associate director for the FTC’s division of marketing practices, told lawmakers about the most recent efforts regarding unwanted phone calls that aren’t associated with attempts to collect legitimate debt.

“Illegal robocalls remain a significant consumer protection problem because they repeatedly disturb consumers’ privacy and frequently use fraud and deception to pitch goods and services, leading to significant economic harm,” Greisman said. “Illegal robocalls are also frequently used by criminal impostors posing as trusted officials or companies.

“Consumers are justifiably frustrated,” continued Greisman, who indicated the FTC received more than 4.5 million robocall complaints during the 2017 fiscal year.

“The FTC is using every tool at its disposal to fight these illegal calls,” she went on to say.

Greisman noted that since the FTC began enforcing the Do Not Call (DNC) provisions of the Telemarketing Sales Rule, the FTC has brought 135 enforcement actions seeking civil penalties, restitution for victims of telemarketing scams and disgorgement of ill-gotten gains against 439 corporations and 356 individuals. As a result of the 125 cases resolved thus far, the FTC has collected more than $121 million in monetary relief for defrauded consumers and civil penalties.

The FTC said actively coordinates with law enforcement partners, technical experts, industry and other stakeholders; for example, providing input to the National Association of Attorneys General Do Not Call working group. The FTC added that also works closely with federal law enforcement partners to conduct robocall enforcement “sweeps.”

In addition, last month, the FTC and FCC co-hosted a Joint Policy Forum to discuss the regulatory and enforcement challenges posed by illegal robocalls, including Caller ID blocking and “neighbor spoofing.”

And as opposed to collectors trying to reach delinquent vehicle installment contract holders, Greisman emphasized what the FTC recommends regarding robocalls deemed to be illegal.

“In the case of robocalls, the FTC’s message to consumers is simple: if you answer a call and hear an unwanted recorded sales message — hang up. Period,” she told Senators.

FTC and FCC hosting 2 events to examine illegal phone calls


As opposed to the legitimate collections efforts put forth by dealerships, finance companies and their service providers, federal regulators are looking to curb unwanted phone calls that are out to swindle consumers.

Two upcoming events will highlight cooperative efforts by two agencies to combat illegal calls and promote innovative solutions to protect consumers

The Federal Trade Commission and the Federal Communications Commission announced two upcoming events aimed at furthering the fight against illegal robocalls and caller ID spoofing. The agencies will co-host a Policy Forum later this month and a Technology Expo in April.

Unwanted calls — including illegal robocalls, spoofed calls and telemarketing — are a major source of complaints to both the FTC and FCC. Under acting FTC chairman Maureen Ohlhausen and FCC chairman Ajit Pai, the agencies have combated this consumer problem through numerous policy-making efforts and strong enforcement actions.

“Consumers are fed up with illegal robocalls that disturb their privacy and often pitch scams,” Ohlhausen said. “We’re going to expand our fight against this scourge through initiatives like the upcoming Technology Expo and Policy Forum, which amplify our impact through close coordination with the FCC and other partners.”

“Scam robocalls and deceptive spoofing are real threats to American consumers, and they are the number one consumer complaint at the FCC,” Pai added. “We’re committed to confronting this problem using every tool we have. I’m pleased to announce these efforts in our continued work with the FTC to protect consumers.”

On March 23, the two agencies will co-host a Policy Forum at FCC headquarters to discuss the regulatory challenges posed by illegal robocalls and what the FTC and FCC are doing to both protect consumers and encourage the development of private-sector solutions. The live video and other information related to this event .

On April 23, the FTC and FCC will also co-host a Technology Expo for consumers at the Pepco Edison Place Gallery in Washington, D.C. This event will feature technologies, devices, and applications to minimize or eliminate the illegal robocalls consumers receive. The FTC and FCC said they have worked closely with phone companies, tech innovators, and others to find solutions for consumers to the problems of illegal robocalls and malicious spoofing.

More information on this Expo, including how innovators can seek to participate, .

In combating abusive and fraudulent calls through early 2018, the FTC’s enforcement actions have resulted in 134 lawsuits against 789 companies and individuals alleged to be responsible for placing billions of unwanted telemarketing calls to consumers. The FTC has been awarded judgments totaling over $1.5 billion and has collected over $121 million from these violators.

Under Pai, the FCC proposed more than $200 million in fines last year alone for apparent illegal spoofing by telemarketers in first-of-their-kind cases under the Truth in Caller ID Act.

In addition, the FCC has adopted new rules to allow phone companies to block robocalls that are likely to be illegal, such as those purporting to be from non-existent numbers. The agency is also seeking public input on ways to help authenticate caller ID information and reduce unwanted calls to reassigned phone numbers.

FTC Act civil penalties rise based on inflation


In combing through the Federal Register this week, the National Automobile Dealers Association found that the Federal Trade Commission recently announced increases to various civil penalties amounts within its jurisdiction to adjust for inflation.

In particular, that could be associated with collections and repossessions. The regulator stated that the penalties for violations of Section 5 of the FTC Act — which can include unfair or deceptive acts or practices — will increase.

The FTC indicated the penalties would jump from $40,654 to $41,484.

also mentioned that knowing violations of the Fair Credit Reporting Act would increase, too, climbing from $3,817 to $3,895.

The regulator reiterated that it made the moves by “implementing adjustments to the civil penalty amounts within its jurisdiction to account for inflation, as required by law.”

The actions adjusted the figures since the FTC made its most recent update last January.

The FTC certainly keeps a watchful eye on collections activities such as asking for comments about its current rules.

FTC reaches settlement with Texas Toyota dealer over deceptive ads in Spanish newspaper


The complexities of advertising finance terms in a language other than English landed a dealership in regulatory problems with the Federal Trade Commission.

Cowboy AG, a Dallas company doing business as Cowboy Toyota and Cowboy Scion, recently agreed to settle FTC charges that it deceptively advertised financing and leasing terms in ads placed in a regional Spanish-language newspaper.

The FTC’s administrative complaint charged that Cowboy Toyota ran full-page Spanish-language ads claiming that consumers could buy or lease a vehicle at certain favorable terms that were prominently stated in Spanish in the ads, with material limitations to those terms provided only in fine-print English at the bottom of the ads. The complaint alleged the dealerships violated the FTC Act by misrepresenting many claims, including that:

—No down payment was required.

—The advertised low monthly payments were available to consumers who financed their purchases.

—The advertised interest rates, monthly payments and other terms were available to consumers with bad credit.

—Certain new 2016 Toyotas were available for purchase at the time of the ads in 2017.

According to the FTC, Cowboy Toyota’s misrepresentation of the cost of purchasing or leasing vehicles, qualifications or restrictions for financing or leasing vehicles, and the availability of cars violated the FTC Act. Officials indicated the dealership also failed to clearly and conspicuously disclose credit or lease terms they are required to state under the Truth in Lending Act (TILA) or the Consumer Leasing Act (CLA) when they touted certain “triggering” terms of the credit or lease, such as the monthly payment.

Officials believe the proposed order settling the FTC’s charges will ensure that Cowboy Toyota does not engage in the deceptive conduct alleged in the commission’s complaint in the future.

First, the order prohibits the dealership from misrepresenting the cost of financing or buying a vehicle, including terms related to the amount or percentage of the total price needed for a down payment, the number of payments required over the full financing term, and the amount of any payment or repayment obligation over the loan term, including any balloon payment.

Next, the order prohibits Cowboy Toyota from misrepresenting the cost of leasing a vehicle, including the total amount due at lease inception, the down payment required, the acquisition fee, any other payments required at the beginning of the lease and the amount of all monthly payments over the term of the lease. The order also requires the dealership to accurately represent any qualifications or restrictions on a consumer’s ability to obtain offered financing or lease terms, including restrictions based on their credit history.

Furthermore, the order instructs Cowboy Toyota to clearly and conspicuously disclose all financing and lease terms in its ads, as well as all related qualifications or restrictions. In addition, if most consumers likely will not qualify for the credit rate advertised, the order requires the dealership to clearly and conspicuously disclose that fact. It also requires that if a representation is made in one language, any material limitations must also be made in the same language.

Also, the order prohibits Cowboy Toyota from misrepresenting the number of vehicles, makes, or models that are available for purchase or lease, and bars them from violating TILA and its implementing Regulation Z by requiring clear and conspicuous disclosures regarding a variety of purchase or lease terms, including the percentage of any down payment required, the amount of any payment, the amount any finance charge, the terms of loan repayment and the annual percentage rate (APR) associated with a loan.

Finally, the order instructs Cowboy Toyota to comply with the CLA and its implementing Regulation M by prohibiting deceptive lease advertisements and requiring that all ads clearly and conspicuously disclose a range of facts, including that the advertised deal is a lease, the total amount due on delivery, the number and timing of scheduled payments, and whether or not a security deposit is required.

The commission vote to issue the administrative complaint and to accept the consent agreement was 2-0.

The FTC reiterated that the regulator issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the commission issues a consent order on a final basis, it carries the force of law with respect to future actions.

Each violation of such an order may result in a civil penalty of up to $40,654.


Southern California dealer group to pay FTC $1.4 million over advertising issues


The Federal Trade Commission flexed its regulatory muscle again this week.

Officials said a southern California-based dealership group will pay $1.4 million to settle FTC charges that it violated a 2014 administrative order prohibiting the company from misrepresenting how much consumers could pay to finance or lease a vehicle.

The proposed court order resolving the FTC’s complaint against the businesses operating as the Norm Reeves dealerships, bars similar advertising misrepresentations and imposes strict compliance and reporting terms to prevent future violations.

According to the FTC’s first complaint, the defendants made a variety of misrepresentations in advertisements to consumers that violated the FTC Act, falsely leading consumers to believe they could buy vehicles for specific low prices, finance vehicles for specific low monthly payments and/or make no upfront payment when leasing.

Specifically, the FTC charged Norm Reeves with deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised price excluded substantial fees and other costs. The ads also allegedly violated the Consumer Leasing Act (CLA) by failing to disclose certain lease related terms. One of the dealerships’ ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit-related terms.

The orders settling the previous complaint, which the commission approved as final in May 2014, prohibited the dealerships from misrepresenting the cost of purchasing a vehicle with financing, or any other material fact about the price, sale, financing, or leasing of a vehicle in its ads.

The orders also addressed the defendants’ alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws.

Officials explained the proposed court order announced this week settles the FTC’s civil penalty complaint that the defendants violated the 2014 order by misrepresenting the total cost of vehicle financing or leases to prospective buyers, or misrepresenting the offer’s availability to all consumers.

They added the order also settles commission charges that the defendants failed to disclose, or did not clearly and conspicuously disclose, credit and lease information required by TILA and the CLA, and failed to maintain proper records, in violation of the order.

In addition to prohibiting future misrepresentations about the material costs and terms of vehicle financings or leases, the order requires the defendants to comply with TILA, Regulation Z, and the CLA. It also provides for a $1.4 million civil penalty and contains strong compliance and reporting requirements to ensure compliance with its terms.

The commission vote authorizing the staff to file a complaint for civil penalties and to approve a proposed consent in settlement of the court action was 2-0. The complaint and proposed order were filed in the U.S. District Court for the Central District of California, having been referred back to the FTC by the Department of Justice.

The proposed order settles the FTC complaint against:

—Norm Reeves Honda Superstore Cerritos
—Norm Reeves Ford Superstore Cerritos
—Norm Reeves Lincoln
—Norm Reeves Hyundai Superstore
—Cerritos Infiniti
—Norm Reeves Honda Superstore Huntington Beach
—Conant Auto Retail Group and the Car Group
—Toyota San Diego and Scion San Diego
—Norm Reeves Honda Irvine
—Norm Reeves Volkswagen
—Norm Reeves Buick GMC
—Norm Reeves Acura of Mission Viejo
—Port Charlotte Honda and Port Charlotte Volkswagen
—Norm Reeves Honda Superstore West Covina

FTC reinforces auto industry enforcement priorities


Coinciding with the regulator offering a deeper explanation of its revamped Used Car Rule, Tom Pahl of the Federal Trade Commission made the opening presentation during the National Policy Conference, hosted this week by the National Independent Automobile Dealers Association.

Pahl covered a variety of topics during his 45-minute opportunity behind the lectern at the Dupont Circle Hotel, located less than a test drive distance away from the White House and Capitol Hill. Pahl told nearly 200 dealers, service providers and other industry representatives that working with organizations such as NIADA is beneficial to helping consumers understand the intricacies of acquiring and financing a vehicle.

Pahl also recapped some of the most recent FTC actions. What might be a thorn for dealers and finance companies, Pahl noted that the regulator is trying to make civil investigative demands “more streamlined” and “more transparent of what info we’re seeking.”

Reinforcing the assessment of compliance expert Randy Henrick, , Pahl also mentioned how the FTC is continuing to watch dealer advertising closely when it comes to stores promoting financing options. Many FTC investigations are connected to “truthful statements in advertising to consumers,” according to Pahl, who back in February was appointed as acting director of the FTC’s Bureau of Consumer Protection.

While certainly busy, Pahl went on to point out that the FTC likely won’t be highly active in rule making, rather focusing on regulations already in place.

Pahl urged dealers and finance companies to leverage the guidance available on the FTC’s website as a path to making business decisions that are compliance with the regulator’s mandates. Another example is what the FTC just delivered in response to a request from the National Automobile Dealers Association.

The legal team at Hudson Cook highlighted that the FTC issued a guidance document answering certain frequently asked questions about the revised Used Car Rule and the revised Buyers Guide.

The material explained that the 2016 amendments don’t change the essential requirements of the Used Car Rule. The regulator insisted the changes include certain revisions to the Buyers Guide to give consumers more information and to make it easier for dealers to disclose manufacturer and third-party warranties. Here is a summary of what’s new:

—The revised Buyers Guide recommends that consumers get a vehicle history report before buying a used car and sends them to ftc.gov/usedcars for more information on how to get one.

—The revised Buyers Guide directs consumers that before buying a vehicle, they should visit to check for safety recalls.

—There’s a new description in the revised Buyers Guide of an “As Is” sale to clarify that “As Is” refers only to whether the vehicle is offered with a warranty from the dealer.

—The revised Buyers Guide adds boxes dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available.

—The revised Buyers Guide adds a box dealers can check to indicate that an unexpired manufacturer’s warranty applies.

—The new English-language version of the Buyers Guide adds a statement in Spanish advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish.

—On the back of the revised Buyers Guide, air bags and catalytic converters have been added to the list of major defects that may occur in used vehicles.

NADA offers strategy to handle Equifax concerns

TYSONS, Va. - 

The National Automobile Dealers Association cautioned store managers and personnel that they’re likely to see two trends surface with regard to the Equifax security breach as customers arrive in the showroom or service drive.

Mark Scarpelli, who is the 2017 NADA chairman, specified the two probable scenarios in a blog post the association shared last Friday. Scarpelli mentioned dealerships are likely to get questions from customers about the breach itself as well as a potential increase in credit freezes and fraud alerts on credit applicants’ credit reports.

“Equifax has stated that information from as many as 143 million people in the United States was compromised,” wrote Scarpelli, who is president of Raymond Chevrolet and Raymond Kia in Antioch, Ill., and co-owner of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, Ill.

“Given the number of people affected and the sensitive type of information exposed, dealers should understand the basics of the breach and what it means for their customers,” he continued.

“If dealership personnel do get questions, it is important to first explain that the reported breach occurred at Equifax, and does not involve the dealership, data stored at the dealership or dealership processes,” Scarpelli went on to state.

Scarpelli suggested that dealerships should review guidance provided by the Federal Trade Commission regarding the Equifax matter. He also recommended that the FTC’s guidance can be even more help if F&I office personnel spot a fraud alert or encounter a frozen credit report.

“Dealers and their employees should also be aware that there are already scammers trying to take further advantage of the Equifax breach by calling consumers and trying to obtain personal information through false pretenses,” Scarpelli wrote.

The NADA chairman closed by touching on one other compliance element the Equifax incident might give dealerships a chance to re-examine.

“Lastly, this is a good reminder for dealers to revisit their Red Flags program to ensure that they are taking the required steps to detect and prevent scammers from opening a line of credit using someone else’s information,” he wrote in the .

NJ Hyundai dealer agrees to 8 conditions in settlement with attorney general


What law enforcement determined to be deceptive practices associated with dealership advertising of financing options recently surfaced again — this time in New Jersey.

Garden State attorney general Christopher Porrino and the state’s Division of Consumer Affairs announced that a Middlesex County dealership has agreed to pay $136,000 and change the way it does business in order to resolve the division’s consumer fraud investigation of the dealership’s advertising, sales and leasing practices.

Officials said Sansone Hyundai, located on U.S. 1 in Avenel, entered into the settlement to end the division’s investigation of its alleged activities, including failing to disclose the total price for certain advertised vehicles and charging consumers for aftermarket merchandise that was listed at “no charge” on certain leases and sales contracts.

In a consent order with the division, Sansone Hyundai, among other things, agreed to:

—Comply with all applicable state and/or federal laws, rules and regulations, including the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations and the Consumer Leasing Act

—Not misrepresent the terms and conditions of any financing or lease plan

—Not add and charge for aftermarket merchandise, such as window etch or service contracts, without consumers’ knowledge and/or authorization

—Not represent to consumers that certain dealer-installed options and/or aftermarket merchandise are mandatory when, in fact, they are not

—Not sell consumers aftermarket merchandise that overlaps or provides similar benefits in part to merchandise the consumer has already purchased through the lease or sale transaction

—Accurately reflect in leases the “gross capitalized cost” as required by the consumer leasing act

—Provide consumers with an opportunity to review all leases and/or sales documents and/or aftermarket contracts prior to signing

—Not identify the advertised prices of a motor vehicle by reference to the MSRP sticker, when the vehicle includes an addendum to the MSRP sticker that reflects a higher total price

 “Consumers should be able to purchase a new car without having to worry about misinformation and hidden costs,” Porrino said. “This settlement ensures that consumers will receive transparency and honesty from this dealership, as required by law.”

As previously mentioned, Sansone Hyundai also agreed to make a $136,250 settlement payment to the state.

“Dealerships must fully disclose all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line,” said Steve Lee, director of the Division of Consumer Affairs. “We will continue to enforce the laws and regulations in place to ensure consumers have the facts they need to make informed decisions.”

The settlement Sansone Hyundai reached included a fine only a fraction of what’s been handed out earlier this year.

For example, the Federal Trade Commission announced back in March that the Sage Automotive Group — which includes nine Los Angeles-based dealerships, its holding and management companies and two individuals — agreed to pay more than $3.6 million in order to settle charges that it used deceptive and unfair sales and financing practices, deceptive advertising and deceptive online reviews.

Hudson Cook rolls out 7th edition of CARLAW F&I Desk Book


CounselorLibrary.com, publisher of automobile financing and leasing legal compliance services and part of the Hudson Cook portfolio, announced that it has updated its popular CARLAW F&I Legal Desk Book. Winner of the Axiom Business Book Award, the book gives readers 363 things to know about dealer finance laws and regulations. 

Now in its seventh edition, CARLAW F&I Legal Desk Book — The Answer Book for Finance and Insurance Professionals, presents a law-by-law, regulation-by-regulation guide through the legal maze that dealers face every day. Authored by Thomas Hudson, Michael Benoit, Ralph Rohner and the attorneys at Hudson Cook, this new edition reflects the latest updates to the federal laws and regulations affecting F&I practices. 

“Formatted in a straightforward Q and A design, (the book) addresses many of the everyday compliance issues dealers face and includes links to the actual laws and regulations discussed in each chapter,” the publisher said.

The 390-page book is designated as the official textbook for the Association of Finance and Insurance Professionals’ Certified F&I Professional Program, and is available for $49.95 ( shipping and handling) by going .