FTC Issues Report to FRB on Enforcement Activities and Coordination with CFPB

The Federal Trade Commission issued its annual report to the Federal Reserve Board on FTC enforcement activities regarding the Equal Credit Opportunity Act, Electronic Fund Transfer Act (EFTA), Consumer Leasing Act, and Truth in Lending Act. This year’s report also discusses FTC activities under the Dodd-Frank Wall Street Reform and Consumer Protection Act, such as enforcement of new EFTA requirements and the FTC’s authority over motor vehicle dealers.  The report can be found here.  The FTC discussed it’s joint regulation of auto finance with the CFPB.  The CFPB specifically excludes automobile dealers from CFPB’s jurisdiction, stating that “the Bureau may not exercise any rulemaking, supervisory, enforcement or any other authority, including any authority to order assessments, over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both”.  (Dodd-Frank Act, Title X, § 1029(a)).  The exemption does not exclude, however, “any person . . . that . . . (1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions involving real property; (2) operates a line of business—(A) that involves the extension of retail credit or retail leases involving motor vehicles; and (B) in which— (i) the extension of retail credit or retail leases are provided directly to consumers; and(ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or (3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service.”  (Dodd-Frank Act, Title X, § 1029(b)).   And, to the extent a party (i.e. a car dealer) is exempt from CFPB, “nothing . . . shall be construed as modifying, limiting, or superseding the operation of any provision of Federal law, or otherwise affecting the authority of the Board of Governors, the Federal Trade Commission, or any other Federal agency, with respect to” such car dealer.  (Dodd-Frank Act, Title X, § 1029(c)).   Indeed, “the Federal Trade Commission is authorized to prescribe rules under sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act. in accordance with section 553 of title 5, United States Code, with respect to” such car dealers.  (Dodd-Frank Act, Title X, § 1029(d)).   The FTC noted its coordination with the CFPB, explaining:

Section 1029 of the Dodd-Frank Act gives the Commission new and expanded authority regarding motor vehicle dealers. The FTC retains its current law enforcement authority over motor vehicle dealers, although it will share that authority with the CFPB with respect to dealers engaged in certain practices. The Commission also obtains new authority as of July 21, 2011, to issue rules prohibiting unfair and deceptive acts and practices in connection with motor vehicle dealers, using the notice and comment rulemaking procedures in Section 553 of the Administrative Procedure Act rather than the more elaborate rulemaking procedures in Section 18 of the FTC Act. In connection with this new authority, the FTC is conducting outreach activities and reviewing a wide range of motor vehicle dealer practices. Section 1029 of the Dodd-Frank Act also requires the FTC and Board to coordinate with the CFPB’s Office of Service Member Affairs to address certain motor vehicle issues related to members of the military. The Commission looks forward to working with the Board, the CFPB, and other federal agencies on this initiative.