If you have serviced a customer’s vehicle and have not been paid, you may have a lien. This type of lien is created by law and is properly called a garageman or repairman’s lien (often mistakenly called a mechanic’s lien).   If you have done the following regarding the repair performed, you should have a garageman/repairman’s lien:

  1. Secured consent of the owner to perform work on the vehicle – it will be best if this consent is in writing;
  2. Performed the work;
  3. Remain in possession of the vehicle, remain in possession of the vehicle – to be clear – remain in possession of the vehicle; and
  4. Have not been paid.

All four criteria are required. Note that if you release the vehicle from your possession, your lien goes with it.

What this lien gives you is a priority. This means that if another party has a lien on the vehicle, even if it is the secured lender who financed the purchase, your garageman/repairman’s lien is ahead of that lien, meaning you get paid first. So, do not even release the vehicle to another lienholder trying to repossess the vehicle, unless that lienholder pays you what you are owed (and they will often do that).

To actually get paid for the services, you will need to take some additional affirmative steps. First, we recommend that a lien search be conducted on the vehicle. If you find that there is a recorded lienholder on the title, the first best step may be to contact the lienholder in writing and advise them of the debt you are owed and to notify them that you have a garageman/repairman’s lien, which is superior to their lien. This may result in the lienholder paying the debt you are owed or placing additional pressure on the vehicle owner to pay the debt.

If contact with the lienholder does not get you paid, your next best step is to file a civil complaint for breach of contract and unjust enrichment, and seek damages for the amount owed. For amounts up to $12,000, this can be done at the Magisterial District Court. For amounts larger than $12,000, you will need to file in County Court of Common Pleas. Remember, you are entitled to payment for valid storage fees and for your court filing fees and costs. If you are successful and secure a judgment for money damages, you will then proceed to have the judgment executed, meaning that the vehicle will be sold and you will get paid first (after the sheriff’s office) from the proceeds of the sale. If the vehicle sells for less than what you are owed, you will also have the option to pursue other assets of the customer to receive full payment. Note that a business entity is required to use an attorney for anything filed in the County Court of Common Pleas, which will be for amounts in excess of $12,000 and to execute on any judgment. Unless you have a contract with the customer that entitles you to attorney’s fees (and we rarely see that in the repair world), you will not be entitled for reimbursement for your attorney fees.

There is a constant drip of news about data security breaches, identity thefts and cybersecurity, to the point that it can become background noise. That is, until it happens to you, as I recently found out.

Several weeks ago, I got a call from the administrator of my 401(k) asking if I had requested another distribution from my account.  Someone posing as me had managed to obtain a significant distribution from my 401(k) plan. They had my social security number and enough background information about me to convince the Plan Administrator to make the distribution. Coupled with the fact that they knew where to look for my 401(k) account, a data breach seems the likely source used by this particular criminal. This has become an all too familiar story for employers and other businesses in our current environment.

As businesses that routinely collect sensitive information from both customers and employees, auto dealers are attractive targets for data thieves. Every auto dealer should take a hard look at its current data security regime and ensure that they are taking adequate steps to protect both their employee and customer information.

This is particularly so here in Pennsylvania, given a decision by the Pennsylvania Supreme Court last fall. In that case, Dittman v. UPMC, the Pennsylvania Supreme Court established that an employer owes its employees a duty of reasonable care to protect their electronically stored information, and that UPMC was liable to its employees for breaching that duty.

While the Court in Dittman only imposed this duty on employers, it is not a stretch to see the Court extending its reasoning to other relationships where a business collects and stores personal information, and then fails (in the court’s opinion) to adequately safeguard it. Even without a Court extending the rationale in Dittman, several states have passed laws protecting their citizens from data breaches, and more are being considered by state legislators at present. In this digital age, auto dealers need to be sure that their systems are secure from both internal and external threats, and that they have taken all prudent and reasonable precautions to safeguard the data that they have collected.

Dealers rightfully depend on their DMS vendors to safeguard their data, but that may not limit the dealer’s liability. DMS contracts routinely disclaim any guarantee of data security. Further, they contain limitations of liability that purport to limit the amount the DMS vendor must pay in damages to the amount paid by the dealer under the DMS contract, or less. These provisions in the contract can make recovering for data breach losses more difficult.

Dealers need to be proactive in defending their customers’ and employees’ data. This includes using appropriate security software, adopting strong data security policies, and training employees on what steps to take, and what things not to do, to avoid a data breach. Employee training should be ongoing, and employee compliance should be monitored. The IT system, and all devices that interface with it need to be protected, including devices owned by employees.

In addition to all the preventative steps that a dealer takes, it is also necessary to have an appropriate breach response plan in place. Understanding how you need to react in the face of a breach can significantly lessen the damage that you suffer. You should also be sure that you are carrying appropriate and adequate insurance to cover losses you might sustain. Sadly, it seems that it is no longer a question of IF you will get hacked, but WHEN, as I can personally attest.

Reports of excessive inventory seem to be everywhere.  Sales have slowed, but manufacturer output has not followed suit.  This presents opportunities for dealers to acquire vehicles that are hot sellers, and to gain sales and profits.  It also presents the very real risk of vehicles stacking up not only on manufacturer lots, but also on dealer lots and on dealer floorplans.

In this environment, it is an appropriate time to revisit the protections provided by the Pennsylvania Board of Vehicles Act (“Act”) to dealers regarding new vehicle inventory.

First, the Act does not allow a manufacturer to force a dealer to purchase any new vehicle (this provision extends to parts and accessories as well).  Rather, a new vehicle must be ordered voluntarily by the dealer.  A manufacturer can encourage its dealers to purchase inventory, but it cannot force its dealers to do so.  An exception to this is that a manufacturer can have a provision in its sales and service agreements requiring its dealers to “market a representative line of those vehicles which the manufacturer is publicly advertising.”  When a manufacturer representative is pressuring a dealer to take excessive or unpopular inventory, the dealer has the right to say no.

Second, the Act does not allow a manufacturer to force a dealer to purchase a new vehicle with “special features, accessories or equipment not included in the list price of such vehicles as publicly advertised by the manufacturer or distributor.”  A dealer can resist acquiring oddly configured vehicles.

Third, the Act does not allow a manufacturer to “delay, refuse or fail” to provide a dealer with a reasonable quantity of ordered new vehicles, taking into consideration the dealer’s facility and sales potential (this provision extends to parts and accessories as well).  A dealer has the right to be provided with a reasonable inventory of new vehicles.

It can be challenging to resist manufacturer pressure to purchase excessive numbers of vehicles or unpopular vehicles.  The Act provides protection in the form of a backstop against such aggressive manufacturer behavior.  As the industry works through this period occasioned by unprecedented inventory levels, dealers should be extra diligent in monitoring new vehicle inventory and pushing back where a manufacturer is applying pressure on the dealer to maintain an inventory that is not consistent with reasonable business practices.

Corruption in the transportation industry has been a problem for many years.  From Volkswagen’s diesel scandal, to the most recent investigation into illegal payments made by Fiat Chrysler to United Auto Workers’ former vice president, the auto industry has struggled with keeping things honest.  In an industry focused increasingly on innovation and adaptation, the “old ways” nevertheless die hard.  Uber, a relatively a new entrant into the transportation field, is wrestling with the same issues the auto industry has battled for years.

In recent SEC filings, the ubiquitous ride-hailing company disclosed that it has been under investigation by the DOJ for two years for potential violations of the Foreign Corrupt Practices Act (“FCPA”).  The investigation relates to conduct that allegedly occurred in Indonesia, Malaysia, China and India.  The disclosure was made in documents Uber filed this April as part of its initial public offering, in which it seeks a valuation of around $100 billion.

In simple terms, the FCPA is an anti-bribery law.  It prohibits companies or their representatives from corruptly offering, paying, promising to pay, or authorizing payment of anything of value, either directly or through a third party, to a foreign government official or its representative to obtain or to retain business or to gain an unfair advantage.  The phrase “anything of value” has been broadly interpreted to include all kinds of gifts, including jewelry, cars, travel and entertainment.  Because the statute has no monetary threshold, meaning that even the smallest gifts are prohibited.  To be illegal, the payments must be made with a “corrupt” motive and must be intended to cause an official to take an action that would benefit the payor.  Willful blindness or deliberate ignorance of bribery will also support a violation.  Moreover, the payment need not be made directly to the foreign official; payments to friends or family may also violate the Act if made to influence the official.

Several auto manufacturers have faced FCPA investigations and prosecutions, including AB Volvo, Daimler, and Fiat.  In 2017, the DOJ charged five individuals for participating in a bribery scheme involving Rolls-Royce and its American subsidiary.  Rolls-Royce paid $170 million to resolve the DOJ charges and the majority of the individuals charged pleaded guilty.

In Uber’s case, the problematic conduct ranges from “small payments” made to police in Indonesia, to a corporate donation of “tens of thousands of dollars” made to a government-backed entrepreneurial program in Malaysia.  According to reports, after the donation, a Malaysian government pension plan sponsor invested $30 million in Uber, and the government passed favorable legislation benefitting Uber’s growing presence in the country.

So, what does this mean for Uber?  At the moment, it’s unclear.  FCPA violations carry both civil and criminal penalties, with penalties up to $2 million for each violation.  In its disclosure, Uber relayed that it is cooperating with the DOJ and it remains to be seen whether any charges will be filed.  Under the DOJ’s Corporate Enforcement Policy, companies that self-disclose and remediate FCPA violations may be offered leniency and even declination of prosecution.

Uber’s disclosure is yet another reminder that all companies operating overseas would be wise to have a compliance program aimed at identifying and preventing these types of illegal grease payments.  If Uber finds itself on the wrong side of the law on this, it could mean substantial fines and increased compliance costs, which will inevitably impact the Company’s bottom line, along with its 22,000 employees and drivers in the U.S. and around the World.

Auto dealerships and service centers often utilize storage tanks for fuel, waste oil, and wastewater oil-water separators.  They should closely review and understand Pennsylvania’s regulation of aboveground and underground storage tanks, especially important changes issued in late December 2018.  Many new requirements became effective at that time, yet the Pennsylvania Department of Environmental Protection (“PADEP”) and the regulated community are still grappling with the practical application of some provisions.  Owners and operators of regulated storage tanks should already be in compliance with the new requirements that are in effect.  They should also continue to track additional developments, as some provisions are phased in and PADEP continues to release new forms and guidance.  A few noteworthy changes for auto dealerships and service centers are briefly summarized below.

Background on the Final Rulemaking

The rulemaking was intended to align Pennsylvania’s storage tank program with the federal program administered by the U.S. Environmental Protection Agency (“EPA”).  Under federal law, state agencies may develop their own regulatory programs to apply in lieu of the federal program, but the state program must be at least as stringent as the federal program.  In 2015, EPA amended the federal underground storage tank (“UST”) regulations, giving state agencies three years to amend their own regulatory programs to match the federal program.

Defining USTs

One of the notable changes in the rulemaking concerns the definition of USTs.  Previously, many in the regulated community operated wastewater treatment tank systems, including oil-water separators (“OWSs”), as exempt from regulation.  The rulemaking changed this, however, as this exemption now only applies to wastewater treatment tank systems that are regulated under certain sections of the federal Clean Water Act.  On the other hand, the definition of aboveground storage tank (“AST”) specifically exempts flow-through process tanks, including OWSs.  As applied to automotive dealerships and service centers, the use of a parking-lot OWS may trigger compliance obligations under the recent rulemaking, but PADEP has yet to release any guidance addressing this issue.  Unfortunately, owners of previously unregulated/deferred storage tanks were only given sixty days from December 22, 2018, to register newly regulated tanks (deadline of February 20, 2019).  As the regulated industry awaits further PADEP guidance, there is no indication whether PADEP would exercise enforcement discretion where the owner failed to register a tank because the obligation was unclear when the deadline passed.  Stay tuned.

“Suspected Releases” and Release Reporting

There are also important changes to the release investigation and reporting procedures.  They now require owners and operators of USTs to conduct an investigation whenever an “indication of a suspected release” occurs.  “Suspected release” remains undefined under the new regulations, but there is a list of six conditions that constitute an “indication of a suspected release,” such as the presence of water in a UST system.

Once the investigation of the suspected release is completed, owners and operators of USTs are required to report confirmed releases.  Additionally, owners and operators of USTs are now required to report suspected releases when an investigation is inconclusive (i.e., the investigation cannot determine whether a release has or has not occurred).  As before, when an investigation confirms that no release has occurred, no further action is required aside from recovering and removing the regulated substance.

New Periodic Testing and Inspection Requirements

Looking forward, two new regulatory provisions added by the final rulemaking will be phased in over the next two years.  The first provision addresses periodic testing requirements for overfill prevention equipment, containment sumps, spill prevention equipment, and release detection equipment.  Generally, this equipment must be tested at least every three years using the specifications of the original manufacturer, an approved code of practice, or PADEP guidance.

The second provision concerns monthly and annual walkthrough inspection requirements.  By December 22, 2019, owners of USTs must begin to conduct and document monthly walkthrough inspections for spill and release detection equipment.  Similarly, owners of USTs must inspect containment sumps and handheld release detection equipment annually.

Changes to PADEP’s Reports and Forms

Along with the new testing and inspection provisions, PADEP released a number of new forms and reports that must be completed by owners and operators of storage tanks to evidence compliance with the new regulatory requirements.   Additionally, PADEP revised several existing forms, such as the permitting and registration application.  Owners and operators of storage tanks should ensure that the forms used in their operations are up-to-date.

Complying with the New Storage Tank Regulations

Although many of the regulations have been effective since December 2018, several questions remain regarding the status of certain storage tank features, such as OWSs.  Auto dealerships, service centers, and other entities potentially affected by the regulations should thoroughly review the changes and remain apprised of additional developments and PADEP interpretations.  If you have any questions concerning how the new storage tank regulations apply to your operations, you may contact the authors or other members of McNees’s Auto Dealer Practice Group.

When we think of financing motor vehicles in the auto industry, our minds often draw to compliance with consumer protection laws and avoiding the attention of enforcement agencies on both the state and federal level—states’ attorneys general, the Federal Trade Commission, the Consumer Financial Protection Bureau and the Department of Justice all may investigate and prosecute dealerships who take advantage of consumers in the terms for financing the sale of a motor vehicle.

The financing of motor vehicles, however, also creates dealer obligations to financial institutions and creditors, including those creditors financing vehicles as dealer inventory. A dealer’s failure to uphold obligations to creditors can create other legal troubles for that dealer. Two pending Federal court cases reveal that a dealer who makes misrepresentations when selling vehicles to a customer can have problems—ones that don’t stop at the government’s efforts to protect the little guy, but which extend to banks and other financers.

Reagor-Dykes Auto Group and Ford Motor Credit

Ford Motor Credit Company, LLC is credited with discovering a pattern of fraudulent behavior that is contributing to the collapse of a major auto dealer in Texas. Bart Reagor and Rick Dykes, the two namesakes of the Reagor-Dykes Auto Group, personally guaranteed loan agreements for floor plan financing at the Group’s various dealerships. After Ford Credit sought an emergency audit of the Dealership Group in July 2018, the Group’s CFO admitted that he had fraudulently reported the auto group’s financial information to Ford Credit. Ford Credit became suspicious of the fact that the group’s dealerships would report an unusually large amount of sales the week before each quarterly audit. Shortly after the emergency audit, the Reagor-Dykes Auto Group entities filed for bankruptcy, and Ford filed a lawsuit in the United States District Court for the Northern District of Texas, alleging that Reagor-Dykes engaged in the following practices, each of which constitute breaches of the Group’s loan agreements:

  • Reagor-Dykes sold vehicles sometimes 55 days before reporting to Ford Credit (as reflected by Department of Motor Vehicle records) in violation of the Dealerships’ obligation to repay the sale price for the vehicle within 7-day of the sale;
  • Reagor-Dykes sought floor financing for a vehicle at one dealership, then moved the vehicle to another Reagor Dykes dealership for additional floor financing; and
  • Reagor Dykes obtained floor financing for vehicles which had already been sold to customers.

Ford claims that the personal guarantees permit Ford to seek immediate compensation from Reagor and Rick Dykes as guarantors for the violations alleged. Ford filed a motion for summary judgment against the Guarantors for more than $112 million in damages plus post-judgment interest and attorneys’ fees. Ford claims that the fact that the amount owed by Reagor and Dykes is undisputed entitles Ford to immediate recovery.

Guarantors and former owners of the Auto Group, Reagor and Dykes, do not appear to deny that the fraud occurred in their responsive pleadings. They claim, however, that Ford knew about the out-of-trust sales long before the June 2018 audit. Thus, they argue that Ford actively permitted the fraudulent sales to occur and materially altered the terms of the underlying loan agreement. Under Texas law, where a creditor and debtor materially alter an agreement without the guarantor’s consent, the guarantor is absolved of liability on the debt. Reagor and Dykes argue that Ford’s knowledge and consent to the Dealerships’ fraudulent behavior relieves the Owners’ of liability on the Guarantees. The District Court‘s determination of the merits of Ford Credit’s claims and the related defenses is still pending.

Coad Toyota and Capital One

Capital One Auto is suing Missouri dealership Coad Toyota for misrepresenting the value of certain financed vehicles, seeking more than six hundred thousand dollars in damages. Capital One alleges that Coad inflated the state sales tax owed on financed vehicle purchases, represented that customers made down payments where they actually had not, and engaged in “powerbooking” (misrepresenting the existence of vehicle features or options in order to inflate the overall value of the vehicle). As a result, Capital One claims that it suffered monetary losses in the form of diminished value of the liens it holds on those vehicles. Should Capital repossess a customer’s vehicle on default, Capital One may not be able to recover all that they are owed because the resale value of the vehicle would not fully cover the balance. Coad has until April 29, 2019 to file an answer to Capital One’s Complaint.

It is important to remind dealership employees involved in sales and financing that despite the pressure to make sales happen, they should always provide truthful information in the sales documents. Fudging the numbers might seem to help a customer in the moment, but the potential effects of such misrepresentations can damage the dealership’s relationships with financers and can still hurt the customer later. The Federal Trade Commission notes that inflating the numbers for a borrower to obtain approval for a loan increases that borrower’s risk of default by obligating them to greater debt than they may be able handle. Additionally, when a purchase money loan is secured by a vehicle whose true value does not cover the amount borrowed, there is greater risk that the lender will need to obtain a deficiency judgment against the customer even after repossession to cover the amount owed on the loan. In the end, no one wins when the value of a transaction is inflated.

Moreover, both cases demonstrate the importance of reporting accurate information to all third parties in relation to a transaction, including the relevant state agencies. Both Ford Credit and Capital One cite information that the dealers reported to state agencies as evidence of fraudulent activity. Both dealerships are facing or likely to face additional problems correcting the bad information they provided to the agencies and any violations that may result.

Pennsylvania already counted itself as one of the more than 30 states with autonomous vehicle laws; however, the Platooning and Highly Automated Vehicles Act (the “Act”), signed into law by Governor Tom Wolf on October 24, 2018, provided a glimpse of where automated vehicles are already operating in our society.  While immense public attention has been poured on autonomous personal vehicle development and testing, the Act highlighted that the commercial space is where our economy can and will more quickly benefit from autonomously operating of vehicles.

The Act established the Highly Automated Vehicle Advisory Committee to advise PennDOT with respect to technical guidelines, best practices and methods of overseeing the development, and eventual introduction, of highly automated vehicles.  The creation of this Committee followed the Autonomous Vehicle Policy Task Force, whose final report establishing testing guidelines for autonomous vehicles in the Commonwealth was published in November 2016.

In addition to forming that Committee, the Act made two additions to existing law on the use of autonomous vehicles in the Commonwealth.  First, the Act added authorizations for PennDOT and the Turnpike Commission to create highly automated work zones, in which highly automated work zone vehicles may be used in conjunction with construction and repair projects.  Specifically, a “highly automated work zone vehicle” was defined in the Act as “[a] motor vehicle used in an active work zone, as implemented by the department or the Pennsylvania Turnpike Commission, as applicable, which is: (1)  equipped with an automated driving system; or (2)  connected by wireless communication or other technology to another vehicle allowing for coordinated or controlled movement.  PennDOT requested this authority in order to pilot  autonomous truck mounted attenuators, which are vehicles positioned at the beginning of construction zones to shield workers from collisions.  The Act, however, granted substantially broader authority to use autonomous vehicles in work zones.  The language in the Act covered any use of such vehicles, including those types of automated construction equipment already on the market.

Finally, the Act authorized PennDOT to regulate “platooning” and authorized platooning on certain Commonwealth roadways, including the Turnpike.  Platooning was defined as the act of operating a number of autonomous or semi-autonomous vehicles in a convoy with each vehicle following closely to the vehicle in front of it.  This addition contemplated a lead vehicle operated by a human driver with autonomous vehicles following along in a line.  As automation takes hold, trucking companies and the military will reduce costs by having a single driver leading a convoy of autonomous vehicles.  For now, platoons were limited to 3 vehicles, with the first being operated by a human.  That number, however, will likely increase as these technologies are more widely utilized and proven.

With the passage of the Act and the successful completion of the second annual Pennsylvania Automated Vehicle Summit in 2018, Pennsylvania made clear its intention to remain at the forefront of autonomous vehicle development.

I don’t have a Great Aunt Edna and if I did, she probably wouldn’t have a Snap account but you, your parents and your children likely have Facebook accounts with cherished family photos and other digital memories.  Our burgeoning online activity creates troves of so-called ‘digital’ assets, some of which may be every bit as valuable (if not more so) than your grandparents’ china and silver. At death, access to these digital assets poses many challenges.

The task of an executor has always been to identify the decedent’s assets, pay the decedent’s liabilities and debts, and distribute the decedent’s assets pursuant to the terms of the Last Will and Testament. Traditionally, this process generally involved a search of the decedent’s records.  Accounts and bills were identified through stored records or subsequently received mail.   An Agent acting under a Power of Attorney has similar responsibilities.  Password protected accounts makes even identifying these assets harder.

A working definition of “digital assets” generally include digitally stored content, online accounts and files stored on digital devices, such as computers and smartphones. In addition, accounts managed and maintained on the internet, such as e-mail, social media Facebook, Twitter) online payments applications (PayPal, Square), online shopping accounts, and online storage accounts all constitute “digital assets.”

In 2014, we alerted our estate planning clients as to the importance of updating estate plan documents to give fiduciaries (agents under Powers of Attorney, Executors under Wills) the power to manage these assets.  As of 2019, laws authorizing the delegation of such powers have matured.  Many states, but not yet Pennsylvania, have adopted a version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which recognizes digital assets as property that can be managed preserved and, in some cases, accessed by third parties following death or incapacity.

For more information on managing your digital assets and the importance of having proper planning in place, see our May 2014 article, a recent Forbes article, and a useful summary of RUFADAA.  Contact any member of the Auto Dealer Practice Group with questions about your estate planning.


Additional credit for this article goes to Andrew Rusniak, Esquire, McNees Wallace & Nurick LLC.

Just completed your estate planning?  Let’s be sure.  You have a Will?  Super.  Powers of Attorney?  Terrific.  Living Will?  Excellent.  Now, have you checked the designations on your retirement plan?  Life insurance?  Health Savings Accounts?

While a Will remains a critical part of an estate plan, it doesn’t get the whole job done for most modern estates.  For dealership owners, executives, and managers, a retirement plan (an IRA, 401(k) or the like) likely represents significant value.  Disposition of these accounts is directed primarily, if not exclusively, through beneficiary designations and not through a Will.  Other employment-related benefits such as dealership group term life insurance and health care savings accounts also pass by their beneficiary designations.  Significantly for dealers, the proceeds of life insurance acquired as security for financing, or for key-man or buy-sell purposes, will pass only by beneficiary designations even where a stock purchase agreement or loan document directs use of the proceeds.  In short, whatever your Will says, it generally has no effect on assets with beneficiary designations.

Having no designated beneficiary, naming the wrong person or not having a contingent beneficiary designated are three common scenarios we see.  Each can have significant negative consequences.  For tax purposes, because most retirement plans are funded with after-tax dollars, naming the right beneficiary affords the opportunity to defer taxable income and minimize tax.  Failing to update beneficiaries after significant life events such as divorce or death of a spouse or child can result in plan benefits being paid to the wrong person or to a minor for whom a guardianship may need to be established through the courts.  While making these arrangements, it is best to check that beneficiaries named in other places (i.e. your dealer franchise agreement) are up-to-date and match the estate plan set forth in your Will.

More complex estate planning requires focused coordination between beneficiary designations and Will or Trust provisions.  This sort of planning can protect vulnerable beneficiaries (young children or beneficiaries with special needs or a history of substance abuse or mental health challenges).  Second marriages may necessitate special attention to planning with retirement plan assets and insurance to balance the beneficial interests of spouses and children.  But whether your estate requires complex or simple planning, your plan is not complete without consideration of those all-important beneficiary designations.

Always consult your professional advisors on the tax and distribution implication for naming beneficiaries.

With the current administration, we have continued to see an evolution of less enforcement at the Consumer Financial Protection Bureau.  Cheers for this change should be kept in check because it may be causing state enforcement agencies to be more active in consumer financing areas.  Previously, there was collaboration between the CFPB and state agencies; that has not been true in this administration.  Rather, states are now leading their own initiatives.

The PA Office of Attorney General has broad authority to enforce consumer protection matters.  The PA Department of Banking and Securities has similar authority in any transaction involving lending.  And, some state Legislatures have shown interest in legislative or regulatory enhancements in this area.

Historically, state resources for this enforcement have been limited.  With the shift in CFPB enforcement, however, states seem to be finding new resources or reallocating resources to address many issues previously handled by CFPB.  It is also possible that we will see more pooling of resources among states as they look toward initiatives that lend themselves to multistate enforcement – one state leading an effort in which other states can tag along.

Auto finance remains high on the list of priorities and concerns for state enforcement agencies; specifically, sub-prime lending practices, concern for a borrower’s ability to repay the debt, and unfair/deceptive acts and practices.  Don’t let your guard down because CFPB has minimized its efforts.  In fact, in light of states’ renewed interest in this area, ramping up compliance may be in order as states have more enforcement authority over the auto industry than CFPB.