Top 5 compliance stories in 2024

Federal regulators in 2024 have been active in auto finance, levying hefty fines against major banks and pushing for stricter regulations surrounding dealership sales practices. However, the landscape could shift dramatically in the coming year, with the administration of President-elect Donald Trump expected to dial back regulatory focus . The change comes on the heels of a year marked by significant regulatory focus on auto finance spanning ancillary products, sales practices and customer-centric actions that will have a lasting influence into 2025. Here are Auto Finance News’ top 5 compliance stories of 2024: 1. TD Bank fined $3.1B, hit with U.S. asset cap The U.S. Department of Justice (DOJ) and the Financial Crimes Enforcement Network fined Toronto-based TD Bank $3.1 billion related to money laundering charges. In addition, the Office of the Comptroller of the Currency imposed an asset cap of $434 billion for the bank’s total U.S. assets, leading to the bank deciding to pullback on commercial auto lending and other less profitable portfolios. In an unrelated case, the U.S. Consumer Financial Protection Bureau (CFPB) fined TD Bank $28 million on Sept. 12, accusing the bank of supplying inaccurate customer information to consumer reporting agencies. 2. FTC cracks down on ‘payment packing’ The Federal Trade Commission (FTC)'s Combating Auto Retail Scams (CARS) Rule has faced legal delays this year, but that hasn’t stopped the commission from targeting what it views as deceptive sales practices. The FTC accused three Texas dealerships owned by Asbury Automotive Group — a publicly traded company with 155 dealerships across 15 states — of engaging in practices such as “payment packing.” This is when dealerships increase monthly payments by including ancillary items in the sales contract that consumers may not have knowingly agreed to or were misled into believing were necessary. The practice allegedly has disproportionately harmed Black and Latino consumers, according to the CFPB. Asbury has denied the allegations, and the case remains under litigation. 3. Increased scrutiny raises costs of ancillary product refunds Finance and insurance products faced rising regulatory scrutiny in 2024, such as products like Guaranteed Asset Protection. which challenge dealers, lenders and providers with complicated refund processes and compliance costs estimated to exceed $100 million annually. Part of the challenge is that each stakeholder has different needs and guidelines to follow to remain compliant. For example, dealers, who receive about 25% of their profits through selling F&I products, must spend to train sales consultants and F&I directors to communicate the products’ values to consumers and sell products in a compliant manner Industry leaders at Auto Finance Summit East 2024 in May called for streamlined operations as well as better collaboration to address inefficiencies and meet evolving regulations, with the goal of balancing compliance with profitability. 4. CFPB fines Fifth Third Bank $20M for illegal practices The CFPB fined Fifth Third Bank $20 million for alleged illegal practices related to auto loans and unauthorized accounts. The bank was accused of charging excessive fees through force-placed insurance policies, leading to unnecessary costs for 35,000 consumers and the repossession of nearly 1,000 vehicles, according to the bureau. Additionally, Fifth Third was accused of opening false accounts in customers' names. 5. SameDay Auto uses third party to remain compliant with forced-placed insurance SameDay Auto Finance signed on to use Verifacto , an insurance verification technology provider, to improve compliance and communication regarding force-placed collateral protection insurance (CPI). CPI is a contract requiring consumers to maintain insurance to protect the lender's collateral. Scrutiny of CPI increased in 2024, partly because auto insurance rose significantly along with inflation, driving consumers' insurance costs higher. Some consumers opted for limited coverage. The third-party system lets SameDay see the real-time insurance status for their customers, which allows it to reduce mistakes such as charging CPI to a customer who already has full coverage. Register here for the free Auto Finance News webinar "Tapping Aftermarket Products to Improve Dealer Relations and Profitability," taking place on Tuesday, Jan. 14, at 10:45 a.m. ET.

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