Comments to the CFPB
- Coalition comments in response to the CFPB's Request for Information Regarding the Bureau’s Adopted Regulations and New Rulemaking Authority to Write Debt Collections Rules, June 19, 2018
- NCLC Comments to the Consumer Financial Protection Bureau on its Debt Collection Quantitative Disclosure Testing, Aug. 4, 2017 Comments and December 14, 2017 Comments
- NCLC comments to the CFPB re: Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, Outline of Proposals under Consideration and Alternatives Considered, Feb. 28, 2017
- Group Comments to the CFPB re: Advance Notice of Proposed Rulemaking re: Debt Collection, Feb. 28, 2014
- New CFPB Research Highlights Need for Strong Regulations to Protect Consumers from Collection Abuses, Jan. 12, 2017
- Advocates Urge CFPB to Strengthen Outlined Debt Collection Rules to Better Protect Consumers, Sept. 22, 2016
- Advocates Applaud CFPB Proposed Debt Collection Rules but Additional Provisions Are Needed, July 28,2016
- Debt Collection Communications: Protecting Consumers in the Digital Age, June 2015
- Why the CFPB Should Ban Zombie Debt, January 2015
- Group letter to the CFPB re: Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking: Outline of Proposals Under Consideration and Alternatives Considered, March 17, 2017
- Coalition letter to the CFPB re: concerns with outline of proposed regulations on debt collection, Sept. 15, 2016
Issue Briefs and White Papers
- Issue Brief: Consumer Debt Collection Facts, Feb. 2018
- Issue Brief: Rules Needed to Stop Debt Collection Abuses, February 2016
- White Paper: Debt Collection Communications: Protecting Consumers in the Digital Age, June 2015
- White Paper: Zombie Debt: What the CFPB Should Do about Attempts to Collect Old Debt, January 2015
- White Paper: Strong Medicine Needed: What the CFPB Should Do to Protect Consumers from Unfair Collection and Reporting of Medical Debt, Sept. 2014
Hurricanes, wildfires and other natural disasters devastate communities and threaten the financial well-being of residents. The National Consumer Law Center (NCLC) works at the national and state levels to develop innovative policy solutions, train and support local advocates, and educate consumers about their financial options. After the 2017 hurricanes and wildfires that tore apart communities in Puerto Rico, the Virgin Islands, Texas, Florida, California and elsewhere, NCLC launched its Disaster Relief and Consumer Protection project. NCLC's leadership is helping communities deal with the financial devastation of natural disasters while building a network of advocates in affected areas who can share information and learn from one another.
- Comment letter submitted to the Texas General Land Office regarding the State of Texas’s Disaster Recovery Plan, March 5, 2018
- Report: Obtaining Mortgage Relief for Victims of Disasters by Alys Cohen and Margot Saunders, June 2018
- Coalition letter to the federal banking/housing regulators urging stronger policies for homeowners in disaster-affected areas, Oct. 31, 2017
- Coalition letter for a Just and Complete Housing Recovery from Hurricanes Harvey, Irma and Maria, Sept. 28, 2017
- Report: Avoiding Home Repair Fraud: Lessons From Hurricane Katrina by Rick Jurgens, Nov. 2008
- Letter from the National Consumer Law Center and National Association of Consumer Bankruptcy Attorneys to the U.S. Department of Justice for U.S. Trustees Urging Credit Counseling Waivers for Hurricane Victims, Sept. 27, 2017
- U.S Dept. of Justice memo to U.S. Trustees re: Enforcement Guidelines for Bankruptcy Debtors Affected by Natural Disasters, Sept. 14, 2017
- Press release: U.S. Dept.of Justice Announces Temporary Wavier of Credit Counseling for Bankruptcy Filers in Puerto Rico and the U.S. Virgin Islands, Sept. 28, 2017
- Issue Brief: Federal Student Loan Relief after a Disaster: Your Guide to Short-Term and Long-Term Options, January 2018 Leer en espanol
- One-page Guide to Short-Term Student Loan Relief with Two Quick Calls, January 2018 Leer en espanol
- Letter to Education Secretary DeVos re: providing relief for student borrowers in hurricane disaster areas, Nov. 2, 2017
- Need Help with Debts? Don’t get burned by scammers – know the facts about debt relief!, March 2018 || Leer en espanol
- Issue Brief: How the Lifeline Program Can Help Vulnerable Consumers Connect to Voice and Internet Service after a Natural Disaster, March 2018
- Issue Brief: How the Low Income Home Energy Assistance Program (LIHEAP) Can Help Vulnerable Consumers After a Natural Disaster, March 2018
- Group comments to FCC re: Petition for Declaratory Ruling by the FHFA on emergency communications by mortgage servicers to borrowers after a declared disaster, Dec. 4, 2017
How Dealer Discretion Drives Excessive, Inconsistent, and Discriminatory PricingThis groundbreaking National Consumer Law Center analysis of a large national data set unlocks the door on what car dealers pay for auto add-on products and what they charge consumers. Pricing of these optional products involves large mark-ups and arbitrary and discriminatory pricing for consumers.
|Published: October 11, 2017||
Charts & Graphics (PDF)
Add-on products sold by car dealers, such as service contracts, Guaranteed Asset Protection (GAP) insurance, and window etching, make up a large share of dealers’ profits. They also significantly increase car buyers’ costs. While many have questioned the value of these products for consumers, the pricing of these products has received less attention, largely because pricing is not transparent. Even regulators lack information about what car buyers pay for these products. Dealers decide what to charge each consumer and generally only the dealer, the finance company, and the third party provider of the add-on ever know what other consumers are paying. This National Consumer Law Center analysis of a large national data set is a revealing first look at what dealers pay for auto add-on products and what they charge consumers.
- Add-on products are sold at prices far higher than dealer costs. Dealers mark up add-on products more than other similar products are marked up. They mark up add-on products by a far higher percentage than they mark up cars. One dealer sold over 1,000 window etching products, each with a dealer cost of $16 and a charge to the consumer of $189, for a markup of $173 or 1,081%. For Guaranteed Asset Protection (GAP) insurance products, 38 dealers had average markups of 300% or more, and 38 dealers marked up service contracts by an average of more than 300%.
- Dealers are inconsistent in the pricing of add-on products. Individual dealerships charge some consumers many times more than other consumers for the same product with the same dealer cost.
Dealers and Window Etching Pricing
- This inconstant pricing for the same add-ons leads to pricing discrimination, with Hispanics charged higher markups than non-Hispanics.
- Companies that provide car financing play an important role in allowing excessive and discriminatory markups of auto add-ons.
These abuses, damaging enough in themselves, set in place a chain of other consequences for consumers. The expensive add-ons increase the price of cars, putting them out of reach for some consumers.They also increase the loan to value (LTV) ratio for cars, as they increase the amount that consumers finance without providing any real increase to the value of the car. These higher LTVs result in more negative equity, which hurts consumers and other players in the auto sales and finance market because a consumer who owes more than his or her existing car is worth will have a hard time trading it in and buying a new car. High LTVs have also been associated with higher default rates, again harming consumers and the industry as a whole.
- Dealers should be required to post the available add-ons and their prices on each car in the lot, along with the price of the car. To prevent the dealer from reintroducing non-transparency by offering discounts to some customers but not others, the prices for the add-on products must be non-negotiable.
- To root out pricing discrimination, the federal Equal Credit Opportunity Act regulations should be amended to require documentation of the customer’s race or national origin for non-mortgage credit transactions, as is currently required for home mortgage transactions. If discrimination remains hidden, it will not be possible to end it.
- State and federal enforcement authorities should investigate discrimination in pricing of add-on products and bring enforcement actions against a dealer if discrimination is shown. The Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Reserve Board, and state attorneys general all have authority in this area.
|Consumer Credit Regulation||Consumer Warranty Law||Unfair and Deceptive
Acts and Practices
How the New Consumer Protection Financial Bureau Rule
The Consumer Financial Protection Bureau’s (CFPB) new arbitration rule will promote accountability and transparency for a wide variety of consumer financial products and services offered to servicemembers and veterans. The rule allows people to band together in court and prevents companies from using fine print to take away access to the courts through forced arbitration clauses with class action bans.
The Military Lending Act (MLA) already bans forced arbitration of certain disputes. So what does the CFPB add to the arbitration ban in the MLA?
The CFPB rule provides essential protection for our military families and veterans (the MLA only applies to servicemembers) and covers a broader range of financial products. For example, unlike the MLA, the CFPB rule covers these areas:
- Purchase money loans, such as auto loans;
- Credit monitoring and other credit reporting services;
- Bank accounts, prepaid cards, and other noncredit accounts
- Loans before military service, such as a credit card that a servicemember still uses;
- Debt collectors and debt buyers pursuing debt not covered by the MLA; and
- Home equity lines of credit.
The MLA provides no protection in these situations that ARE covered by the CFPB rule:
- Credit bureau giant Equifax’s initial effort to block victims of its massive data breach from access to the courts through a forced arbitration clause hidden on the website for the free credit monitoring it is offering.
- Wells Fargo’s use of older bank account and credit card agreements to block lawsuits over the theft of consumers’ identity used to open fake accounts.
- Banks’ rampant violation of the Servicemembers Civil Relief Act through illegal repossession of cars while servicemembers are away on active duty, as happened to Sergeant Charles Beard and Sergeant Jin Nakamura. Beard’s attempt to bring a class action was thrown out due to a fine-print arbitration clause.
- Army soldier Prentice Martin-Bowen, who sued a buy-here-pay-here used car dealer that repossessed his car despite on-time payments, and kept two trade-in cars and the down payment. Martin-Bowen was forced into arbitration and won a small amount, but he couldn’t pay his lawyer a penny in fees and he couldn’t bring a class action to help the 100 others who suffered the same result. The arbitrator admitted that a jury would likely have awarded more.
- Wells Fargo’s illegal padding of auto loan payments with duplicative car insurance, including for servicemembers on active duty. Some contracts had arbitration clauses.
- TransUnion’s reckless mismatching of consumers, including active duty service-members serving abroad, to people with similar names on a government watch list of suspected terrorists and drug traffickers. TransUnion did not have an arbitration clause in that case, and a jury ordered it to pay $60 million ($7,337 to each class member), but the company has tried in the past to trick people into giving up their day in court.
- Army veteran Joshua Hause, who was given “no choice” and was forced to convert his existing payday loan to a 279% open-end “flex” loan that “I’ll never get out of.” A class action lawsuit over these practices was thrown out of court due to a forced arbitration clause.