The auto finance industry is overdue for transformation. . As increased attention from consumer protection organizations and state regulators brings inefficient and unfair payout practices to light, the industry faces pressure to comply with evolving consumer refund regulations. . We sat down with Brian Reed, CEO and Founder of Digital Auto Advisors, to understand the regulatory headwinds and industry best practices.
How has the relationship between regulators and lenders changed?
In 2015, lack of transparency and appropriate refunds for add-on products at one financial institution was front-page news. . The ripple effect of the news prompted regulators to pay more attention to breakdowns in the GAP refund process. . Since then, providers and dealers have seen increased scrutiny regarding payback deadlines, on a state-by-state basis. . And at the national level, , organizations like the Consumer Financial Protection Bureau (CFPB) are calling for all states to implement refunds to consumers within 60 days of loan payoff, but without guidance on how to get there.
What are lenders responsible for when it comes to unclaimed property?
There’s no real liability unless a lender or provider gets a cancellation request, and they don’t fulfill it. But GAP providers don’t know when a loan has been paid off and when a cancellation request may be imminent. . Even with today’s technology, this knowledge remains in siloes. . This lack of communication and a clear framework for fulfilling refunds makes it difficult to comply with regulations.
How should auto finance providers prepare for the future?
The more you can make the process digital, the better. . The endgame should be electronic communications between lenders, providers, and dealers. . Having a clear understanding of what knowledge resides with each party is key to improving the time from cancellation request to payment, so consumers receive their refunds in a timely manner.
About Onbe
With more than 25 years of industry experience and offices in Chicago, Philadelphia and London, Onbe is a fintech that manages and modernizes customer and workforce disbursements for corporate clients ranging from mid-market to the Fortune 500. . Onbe’s team of experts and technology platform offers clients a turnkey solution to offload their entire B2C payment operations, relieving them of the cost, complexity and risk that come with orchestrating these payments in-house. . Backed by top-tier investors, Onbe delivers on today’s consumer expectations for instant, digital and seamless payments. . To learn more, visit www.onbe.com and follow us on LinkedIn.
