Ignite Consulting Partners reiterated some best practices this week since the Consumer Financial Protection Bureau and the Federal Trade Commission intensified their campaign of weeding out what they deem to be “junk fees.”

Firm experts cautioned that ignoring what regulators are doing on their matter could result in more than just CFPB or FTC officials arriving at the door of your dealership or finance company.

“For those of us in the trenches of the automotive finance industry, the Consumer Financial Protection Bureau (CFPB) has long been a topic of heated discussion. No matter your opinion of the agency, it’s essential to be aware of what they’re focusing on, because where they go, state regulators and plaintiffs’ attorneys go,” Ignite said in an installment of its “Tip of the Week” series.

“In our experience, if the CFPB repeatedly warns regulated industries about a particular behavior, it’s a best practice to ensure what you are doing complies with their guidance. Like it or not, the CFPB isn’t letting go of this issue. They’re committing significant resources to scrutinize fees charged by financial institutions, including dealers and finance companies like us.”

Earlier this month, the CFPB released a special edition of its Supervisory Highlights, sharing results its supervisory work involving many segments of financial services including automotive has generated refunds of $140 million to consumers, $120 million of which is for “surprise overdraft fees and double-dipping on non-sufficient funds fees.”

When CFPB examiners uncover problems, the bureau said they share their findings with companies to help them remediate violations. Typically, as with many of the instances identified within this new report, the bureau said companies take actions to fix the identified problems.

For more serious violations or when companies fail to take corrective actions, the CFPB opens investigations for potential enforcement actions.

“The CFPB continues to uncover junk fee scams that violate the law and undermine consumer trust,” CFPB director Rohit Chopra said in a news release. “We will continue to combat the illegal fees cropping up in consumer finance markets.”

That prompted Ignite to recap a variety of recommendations.

“It’s time to double-check your fee structures,” Ignite said. “Ensure they’re not just compliant on paper, but also in practice. Does every fee you charge relate to a material benefit for the customer? If services for the fee are related to a third party, is the mark up reasonable?

“Compliance issues more often than not, start with consumer complaints,” firm experts continued. “A more compliant and customer friendly fee structure could actually be a point in your favor. Clear, fair, and transparent fees can help maintain and even improve customer relations in an environment of increasing oversight.

“Have a written refund policy that includes processes to determine the start date for the refund (payoff date, etc) and make sure it complies with state law and the relevant documents in the deal jacket,” Ignite added.

Firm experts closed with one more thought on the subject.

“Fool me once, shame on you. Fool me twice, shame on me,” Ignite said. “Some view the CFPB’s repeated focus on the same issues as overreach. However, it’s crucial to stay ahead of the curve by knowing what they’re focus is. This isn’t about agreeing with them; it’s about being prepared. We’ve now been warned multiple times so let’s make sure our house is in order.”

If you need assistance getting that house in order, Ignite can be reached at info@ignitecp.com or visiting https://www.ignitecp.com.