The Consumer Financial Protection Bureau (“CFPB”) has issued regulations pertaining to several matters affecting dealerships. The first is a revision of the Consumer Rights Form used by employers who perform background checks on employees. The Dodd-Frank Act designated the CFPB as the primary rule-making and enforcement agency for issues relating to background checks performed under the Fair Credit Reporting Act (“FCRA”). Previously the Federal Trade Commission (“FTC”) was responsible for these actions. Under the FRCA, an employer must obtain permissrion from applicants and employees prior to requesting credit reports or performing background investigations. The employer must obtain permission in a form that contains no other substantive information. Before the employer may take an adverse employment action against an employee or applicant based on information obtained from credit reports or background checks, the employer must provide the individual with notice of this decision. Such notice must include the document the employer relied upon in making the adverse employment decision as well as a document known as the “Summary of Consumer Rights.” As of January 1, 2013, the CFPB has modified the Summary of Consumer Rights form to clearly show that it, and not the FTC, is the agency tasked with enforcement. Employers who incorporate background investigation procedures into their employment practices must use the new form, which may be downloaded here.
The CFPB also announced new thresholds for the Truth in Lending Act (“TILA”) and Consumer Leasing Act (“CLA”) that go in effect in 2013. TILA and CLA regulate the practices and disclosures that dealerships use when entering into retail installment purchases or leases with consumers. For many years, TILA and CLA only applied to extension of consumer credit totaling $25,000 or less. The Dodd-Frank Act increased the threshold to $50,000 and also indexed the threshold to inflation, meaning that the threshold may be adjusted upward as inflation increases. Including the inflation index, the threshold for TILA and CLA, effective January 1, 2013, is $53,000. Any extension of credit or lease for $53,000 or less will be subject to TILA and CLA and can trigger liability for dealers that violate requirements of those laws.