On November 19, 2015, U.S. District Judge Marianne O. Battani of the Eastern District of Michigan issued an Order Granting Final Approval of an initial, partial settlement of $59 million to auto dealers in the multidistrict (MDL) antitrust litigation against Japanese parts manufacturers. The MDL alleges that certain Japanese parts manufacturers rigged bids and fixed the…

Everyone in the retail automobile industry is familiar with the terms “front-end” and “back-end.” They represent two sources of potential revenue (and, hopefully, profit) for auto dealerships: The “front-end” refers to revenue realized on the sale of the vehicle and the “back-end” includes revenue on anything sold after the vehicle including dealer reserve on dealer-arranged financing (a/k/a indirect auto loan financing), extended service contracts,…

Why do dealerships keep purchasing statutory errors and omissions coverage that is not likely to protect the dealership if it is sued by a customer for truth in lending violations?

I’ve been handling dealership insurance coverage disputes for a long time. I thought the following insurance coverage form became obsolete by the early 2000's, but recently learned I was mistaken:

[A]ll sums which the insured shall become legally obligated to pay as damages solely by…

Can an auto dealership be liable for damages when it transmits a customer’s credit application to several financial institutions through an automated on-line credit application system and the financial institutions pulls the customer’s credit report without authorization from the customer? Does a financial institution need consumer authorization to access the customer’s…

A dealership leases a vehicle to a customer under a 48 month lease agreement. The lease is assigned to Honda Lease Trust, a leasing company, and administered by American Honda Finance Company. If the lessee-customer negligently causes an accident and injures a third party during the term of the lease, is the lessor (dealership or assignee) also liable to the injured party?…

This article addresses the indirect auto lending process (a/k/a "dealer arranged financing"). While the article relies heavily on cases I have defended for dealerships here in Minnesota, the same process is involved across the nation. In Minnesota, an automobile dealership is a “retail seller” as defined by the Motor Vehicle Retail Installment Sales Act (“MVRISA”), Minn.…

Car sales are booming and lenders are clamoring for indirect financing business. Now is a good time to dust off and review your Dealer Agreement (a/k/a lender master financing agreements) with your lenders, particularly the warranty, indemnification and repurchase provisions. Dealerships can, and should, review the terms of their Dealer…

Dealerships have become subject to increased regulation and enforcement, particularly in the areas of consumer advertising, consumer finance and consumer privacy. I recently posted an article to this blog entitled: Auto Dealer Arranged Financing: 51 Laws a Dealer Must Know. You can read the full article…

It’s no secret that auto dealerships have become subject to increased regulation over the past several years, primarily in the areas of consumer advertising, consumer finance and consumer privacy. Although the recession of 2007-2009 was primarily related to mortgage financing,…

I will be a speaker at the Automotive Dealer Subprime Sales Success workshop on April 7-8th in Atlanta, Georgia. I will be speaking about F&I compliance and class action litigation issues (spot delivery, acquisition fees, deferred down payments, credit discrimination, adverse action, recontracting-backdating, among others) as well as auto dealer liability insurance coverage (or non-coverage) for consumer protection, consumer credit and consumer privacy litigation under the Truth in…

With all the discussion about the Consumer Financial Protection Bureau advocating the end of the so-called dealer reserve, I decided to post a series of articles outlining the auto dealer-arranged financing process supplemented by some of the cases I handled on behalf of auto dealerships.

Congress created the Consumer Financial Protection…