Published: December 2014

In favor of expanding the CFPB’s reach in the auto industry

Coalition: Americans for Financail Reform (AFR)

In light of its recent supervision report detailing auto-lending discrimination uncovered at banks, the Consumer Financial Protection Bureau (CFPB) is proposing to oversee larger nonbank auto finance companies for the first time at the federal level.

For millions of consumers, buying or leasing an automobile is one of the most important financial decisions they make. Automobiles are a necessity, especially in areas with fewer public transit options, for consumers trying to commute to work, take kids to school, or conduct other important activities. Currently, the Bureau supervises large banks making auto loans, but not nonbank auto finance companies (finance companies owned by auto manufacturers who generally do only indirect lending).

The CFPB's proposal would expand supervision authority to the larger participants of the nonbank auto finance market. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), the CFPB has authority to supervise certain nonbanks the Bureau defines through rulemaking as “larger participants” in a market. This action will represent the fifth market for which the CFPB has defined “larger participants,” having already defined the term for the credit reporting, debt collection, student loan servicing, and international money transfer markets.

Given the significance of car ownership in the lives of consumers, the CFPB wants to make sure that auto lenders, including auto finance companies, are treating consumers fairly throughout the life of loan by:

• Fairly marketing and disclosing auto financing;
• Providing accurate information to credit bureaus;
• Treating consumers fairly when collecting debts;

Consumer Action and coaltion advocates support the CFPB's proposal to expand its supervision authority to the nonbank auto finance market and urge the Bureau to closely review the data not publicly available to ensure that larger participants in all segments of the market are included in the oversight plan.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Center for Responsible Lending | National Consumer Law Center (on behalf of its low-income clients) | National Association of Consumer Advocates | National Council of La Raza | Americans for Financial Reform | Center for Economic Justice | Consumer Action | Consumers for Auto Reliability and Safety | NAACP | New Economy Project | Public Justice Center | U.S. PIRG | Woodstock Institute

More Information

For more information, please visit NCLC's website.

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In favor of expanding the CFPB’s reach in the auto industry   (CFPBnonbankautoindustry.pdf)