WASHINGTON, D.C. — As the Consumer Financial Protection
Bureau prepares its annual report to Congress, the agency wanted specifics of
what compliance matters other federal regulators are involved with regarding non-bank
entities, which can include franchised and independent dealerships.

The Federal Trade Commission, which has jurisdiction over
dealers, shared what it had with the CFPB this week. But according to federal
documents, the material wasn't everything the CFPB was seeking.

Included in the FTC's annual letter to the CFPB, officials
recapped enforcement and related activities regarding the Truth in Lending Act
(TILA), Consumer Leasing Act (CLA), Electronic Fund Transfer Act (EFTA), and
Equal Credit Opportunity Act (ECOA).

The letter also addressed certain FTC initiatives regarding
auto financing advertising, payday lending, mortgage lending advertising,
mobile payments, and separate FTC staff comments filed with the CFPB on
integrating TILA and Real Estate Settlement Procedures Act disclosures and on
general purpose reloadable cards.

However, FTC Secretary Donald Clark pointed out what the
agency couldn't provide to the CFPB.

"Your letter also asks for specific data regarding
compliance examinations, including the extent of compliance, number of entities
examined, and compliance challenges experienced by entities subject to the
FTC's jurisdiction," Clark said.

"The commission does not conduct compliance examinations or
collect compliance-related data concerning the non-bank entities within its jurisdiction.
As a result, this letter does not provide information on compliance
examinations," Clark went on to say.

While those compliance examinations weren't available from
the FTC, Clark recapped plenty of activity the agency conducted last year in
connection with vehicle financing at dealerships.

Last March, the FTC revealed steps aimed at cracking down at
what officials described as false or exaggerated advertising, calling into
question ads from a group of five dealerships around the country.

The FTC charged that the ads — which ran on the dealers'
websites, as well as on sites such as YouTube.com — "deceived consumers into
thinking  they would no longer be
responsible for paying off the loan balance on their trade-in, even if it
exceeded the trade-in's value."

"Instead, the dealers rolled the negative equity into the
consumer's new vehicle loan or, in the case of one dealer, required consumers
to pay it out of pocket," FTC officials continued.

Basically, the FTC contends that in these ads, the
dealerships promised to pay off a consumer's trade-in no matter what the
consumer owed on that particular unit.

The dealers named in the FTC's complaints included Billion
Auto, Inc., in Sioux Falls, S.D.; Frank Myers AutoMaxx, LLC, in Winston-Salem,
N.C.; Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and
Milford, Conn., respectively, and which advertise jointly; and Ramey Motors,
Inc., in Princeton, W.Va.

All of those dealerships agreed to the FTC's orders that
require them to stop running ads.

The FTC's letter to the CFPB also recapped how the agency
reached a settlement with two California-based companies and their principals
who allegedly took hundreds of thousands of dollars from consumers and banned
them from marketing auto loan relief or any other type of debt relief to
consumers.

The FTC filed charges against the companies — Kore Services,
doing business as Auto Debt Consulting, and NAFSO VLM, doing business as
Vehicle Loan Mod — and their principals last year.

The FTC alleged that the defendants promised to reduce
consumers' monthly auto loan payments by 25 to 40 percent, for fees ranging
from $350 to $799. The defendants offered a 100 percent money back guarantee.

According to the FTC, many consumers were told to stop
making payments on their loans, which increased the risk that their vehicles
would be repossessed. But once the up-front fees were collected, the agency
said the defendants did not do anything to obtain the promised loan
modifications. Consumers who tried to get refunds were denied. And some
consumers' vehicles were repossessed by their finance companies.

The settlement bans the defendants from providing any type
of debt relief service, prohibits them from making misrepresentations about any
other product or service they market and requires them to support claims with
competent and reliable evidence.

Clark's entire letter to the CFPB can be downloaded here.

Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.