Ballard Spahr Podcast Highlights CARS Rule; F&I Sentinel Board Member Weighs In

Ballard Spahr podcasr CARS Rule

The automotive finance industry has been navigating through a maze of regulatory developments, and now the Federal Trade Commission’s new CARS Rule aimed at addressing unfair and deceptive practices in auto sales, has sparked significant discussions and legal challenges, prompting insightful conversations—from legal experts, administrative law professors, and Supreme Court practitioners. In a January episode of the Ballard Spahr Consumer Finance Monitor podcast, host Alan Kaplinsky, longtime practice leader of Ballard Spahr’s Consumer Financial Services Group, alongside firm colleagues John Culhane, Brian Turetsky and Mike Guerrero, discussed the new Rule with industry experts Paul Metrey, senior vice president for regulatory affairs, National Automobile Dealers Association (NADA), and Rick Hackett, former assistant director, Consumer Financial Protection Bureau and current F&I Sentinel board member.

The discussions delved into various aspects of the Rule, shedding light on recent legal developments, including the stay of implementation due to a lawsuit filed by NADA.

The podcast episode provided a comprehensive analysis of the CARS Rule, covering its historical background, scope, key definitions, prohibited misrepresentations, and disclosure requirements. Panel members provided valuable insights into navigating the new requirements of the Rule and understanding its implications for dealerships, auto finance companies, and consumers.

Listen to the episode:

Full podcast transcript

Furthermore, the discussions highlighted the indirect impact of the CARS Rule on auto finance companies, underscoring the need for comprehensive compliance measures across the industry. Legal experts provided guidance on navigating the complexities of the Rule and addressed potential challenges and legislative actions surrounding its implementation.

Key takeaways for lenders in light of the requirements and implications include:

  1. Precise Product Evaluation: Lenders need to thoroughly review all automotive finance and insurance (F&I) products, paying special attention to any exclusions or limitations, such as neighborhood exclusions for GAP insurance.
  2. Due Diligence Before Purchase: Enhanced due diligence is crucial before purchasing portfolios of contracts or individual motor vehicle sales contracts to ensure compliance with the CARS Rule.
  3. Deal-Flow Checklists: Implementing deal-flow checklists can help ensure that dealers are compliant with the requirements of the CARS Rule.
  4. Tweaking Compliance Management Systems (CMS): Lenders should adjust their CMS or vendor-management systems to incorporate new requirements for dealers, including training, compliance systems, and record-keeping standards.
  5. Attention to Detail in Lender CMS: Lenders should pay attention to details that could signal potential violations of the CARS Rule, as failure to address such issues could be viewed as reckless and lead to regulatory scrutiny or enforcement actions.


F&I Sentinel offers unparalleled expertise in F&I product compliance management. Combining technology with human intelligence, we meet auto finance companies wherever they are on their compliance journey to make F&I compliance go their way. Contact us for an initial, no-obligation consultation.


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