Regulators Target BHPH Dealers in Oregon

The National Independent Automobile Dealers Association and Oregon’s Independent Dealer Association are working together to prevent a bill from becoming law, aimed at regulating how buy here pay here dealers could operate in the state, according to a report published today.

Senate Bill 276, if passed, would require BHPH dealers to make the following changes:

• Obtain the same type of license from Oregon’s Department of Consumer and Business Services (DCBS) as payday or auto title lenders.
• Cap interest rates at no more than 20% or the federal funds rate plus 17%, whichever is lower.
• Reduce interest rates to account for the amount of the consumer’s down payment.
• Form a good faith belief that the consumer has the ability to perform on the contract by using underwriting standards passed by DCBS.
• Stop accruing interest once a vehicle has been repossessed.
• Wait to repossess a vehicle until after 30 days from when nonpayment has occurred.
• Cap repossession fees at 7.5% of the purchase price.
• Stop using GPS or starter-interrupt devices.

The Oregon IADA, and the NIADA’s recently formed BHPH Commission have “mobilized BHPH dealers in the state to explain to their legislators the adverse impact the bill would have on the industry” according to the report, and NIADA regulatory counsel Shaun Petersen called the bill “wholly unworkable for the industry.”

BHPHs garnered interest in on a national scale in November 2014 when the Consumer Financial Protection Bureau ordered DriveTime, the largest BHPH dealer in the U.S. to pay  an $8 million civil penalty for harassing debt collection calls and providing inaccurate credit information to credit reporting agencies.

However, attorney Michael Thurman told Auto Finance News at the time that he did not believe the DriveTime penalty  signalled that the agency was specifically targeting the buy-here, pay-here industry.

The CFPB also announced on March 26 that it was “considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans,” according to a press release.

In an effort to block SB-276 in Oregon, along with forming the BHPH Commission, NIADA hired Shawn Miller, a longtime advocate for various industries in Oregon, to contact key lawmaker and encourage them not to let the bill become law.

“Having a place at the table when legislators are considering bills that will negatively impact our BHPH members is critical,” NIADA Executive Vice President Steve Jordan said in the report. “And just plain good for the industry.”

Currently, the bill is pending before the Senate Business and Transportation Committee.

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