One-Two Punch: CFPB Indirect Auto And Add-On Product Orders

The CFPB announced two new enforcement action settlements on September 28: one for alleged discriminatory auto loan pricing and the other for alleged deceptive credit card add-on product marketing practices.

Indirect Auto Settlement: The joint CFPB and DOJ auto-lending enforcement action continues the Bureau's campaign to regulate auto dealer markups via lender enforcement actions. In this consent order, a regional bank agreed to change its pricing and comp system by limiting dealer discretion to mark up interest rates to a maximum of 1.25% above the buy rate for car loans with terms of five years or less, and 1% for loans with longer terms. The lender "has the option," but is not required, "to move to non-discretionary dealer compensation." This follows the template set in the Honda consent order, which involved lowering dealer mark-ups to as low as 1% depending on the term of the loan. The lender will pay $12 million into a settlement fund, and receive a