Ignite Consulting Partners offers a compliance tip each week for dealerships.

This week’s installment delves into a business segment buy-here, pay-here operators often face — repossessions — recapping a $98 million settlement as being possible when regulations aren’t followed exactly.

The compliance firm compiled what it called a minimum 8-point checklist to reinforce the importance of adhering to requirements of your state law for repossession notices. Here is part of Ignite’s reasoning.

“In yet another example of how important it is for car dealers and finance companies to have strong compliance in their post-repossession process, a large national auto finance company had to agree to forgive over $98 million in deficiency balances for consumers due to improper repossession notices,” Ignite began in an industry message. “The settlement affected almost 8,500 accounts with deficiency balances — all of which will be wiped clean. 

“The consumer class action claims allege that the company's repossession notices failed to comply with the requirements of their state law, which contains detailed requirements for exactly what needed to be itemized in the repo notices. States’ statutes’ requirements are often detailed and deviation means the debt left over after selling the repossessed car cannot be collected,” the firm continued.

To help dealerships and finance companies avoid a similar — and expensive — situation, Ignite spelled out a checklist that included:

• Notice of strict compliance (if applicable)

• Notice of repossession

• Notice to right to cure (if applicable)

• Notice of sale and disposition of collateral

• Public sale versus private sale

• How you determine “commercially reasonable”

• Ancillary product refund calculation and issuance

• Deficiency balance notices to consumers

“There’s a lot of regulatory attention being given to these issues right now,” said Ignite, which is also hosting a three-day training event called, “Compliance Unleashed,” set for May 16-18 in Grapevine, Texas.

To reach Ignite’s compliance professionals send a message to info@ignitecp.com or call (682) 888-3426.