Dodd-Frank Act, UDAAP & CMP (Compliance Management Program)

The U.S. Congress established the Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, to promote the financial stability of the United States by improving accountability and transparency in the financial system, and to protect Consumers from abusive financial services practices, and for other purposes. Dodd-Frank requirements went into effect on July 21, 2010.

Dodd-Frank overhauled financial regulation in the aftermath of the Great Recession, and it made changes affecting all federal financial regulatory agencies. Dodd-Frank created a transformation and overhaul of the United States financial regulatory system on a scale not seen since the reforms that followed the Great Depression.

Among other important items, it streamlined the process for the Federal Trade Commission (FTC) to publish new “unfair and deceptive practices rules!”

The Dodd-Frank Act has given the FTC expanded authority regarding Dealerships, especially under UDAAP. Since 2011, the FTC has been gathering information on possible Consumer protection issues that may arise in the sales & financing practices of Dealerships. This continues to be conducted through a series of roundtables and by seeking public comments.

The FTC has a long history of enforcing its laws against the RV and Auto Industries. Most of the agency’s enforcement work has been conducted via Section 5 of the FTC Act, which generically prohibits “Unfair and Deceptive Acts and Practices” (UDAAP).

UDAAP is a set of regulations for businesses, such as Dealerships, that offer financial services to Consumers. UDAAP stands for “Unfair, Deceptive, or Abusive Acts and Practices.” These are behaviors by actors in the financial sector that Dodd-Frank identifies as unfair to Consumers, and therefore regulates against.

The FTC Act allows the FTC to obtain money penalties in connection with violations of FTC regulations, including civil penalties at more than $46,000 per violation and other Consumer relief, such as rescission of contracts and refund of money paid by Consumers. Section 1029(d) of the Dodd-Frank Act authorizes the FTC to issue regulations for Dealerships using the “Notice-and-Comment” process outlined in the Administrative Procedure Act.

In an interesting twist of events that took place Congress partially repealed the Dodd–Frank Act with the “Economic Growth, Regulatory Relief and Consumer Protection Act in 2018, Dodd-Frank further cemented the FTC’s central role in regulating the RV and Auto industry by expressly prohibiting the Consumer Financial Protection Bureau (CFPB) from any rulemaking, supervision, or enforcement with respect to Dealerships.

The FTC also mandates that Dealerships maintain an active and ongoing Compliance Management Program (CMP).

The FTC has taken cautionary steps to also provide Dealerships with a “Safety Net” to protect the Dealership from falling into unforeseen circumstances that would land itself in regulatory purgatory

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