Pub. 11 2012-2013 Issue 4

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 5 new jersey auto retailer w w w . n j c a r . o r g President’s MESSAGE | BY JAMES B. APPLETON No Rest for the Weary President’s Message  continued on page 9 It seems like just yesterday we were lobbying Congress to resist efforts from consumer advocates and the Obama Administration to heap new regulatory burdens on new car dealers. Our goal was to keep the proposed Consumer Financial Protection Board (CFPB) out of your business. Well, it was actually almost two years ago. But already we see reports the CFPB is looking for ways to get at dealers-- actually, two ways to get at dealers. First, the CFPB is reportedly considering enforcement action against several large commercial banks for com- pensating dealers in a manner that allegedly may have resulted in violations of the Equal Credit Opportunity Act. The law was enacted in 1974 to bar discrimination in lending. The actions focus on whether consumers from certain demographic groups pay more for dealer par- ticipation than similarly situated consumers from other demographic groups. Consumer advocates have repeatedly tried to attack and undermine dealer assisted finance by whatever means pos- sible. They refer to dealer participation as a “kick back” and now they are alleging discrimination in auto finance. But we know that dealers provide a valuable service that increases access to and reduces the cost of financing to car buyers. A dealership’s ability to discount the interest rate it offers to consumers—which is made possible by the cus- tomer’s ability to negotiate rates at the dealership—would be eliminated if CFPB action leads to an arbitrary f lat fee compensation system. And, as if that wasn’t enough, the CFPB is also drawing a bead on the use of arbitration clauses in consumer contracts, including retail order forms or buyer’s orders used by new car dealers. The CFPB is gearing up to study the question with an eye toward possible regulations limiting or prohib- iting the use of arbitration clauses in new car deals. Many dealers all across the nation use consumer arbitration as a way to reduce costs, speed the resolution of legal disputes