When it comes to knowing the laws and regulations that influence the automotive industry, few are as well-versed as Lewis Kuhl. As an attorney with the Florida-based law firm Kurkin Brandes LLP, Kuhl has focused his practice specifically on the automotive industry, with his client list including dealers, agents and F&I providers and administrators among them.
Kuhl focuses on all the issues that could affect his clients. These include franchise issues and transactions, licensing, litigation and regulatory compliance, and even real estate law. “We represent providers, specifically, in litigation and with the various regulatory agencies. We assist them with start up and licensing matters, review contracts and forms, provide training, and give them general legal representation.”For providers, Kuhl noted that he most often helps them with consumer litigation over denied claims, issues with state regulatory agencies regarding licensing, start up of new companies and agency audits. And in the past few months he has seen an increase in the number of providers who need advice on the Consumer Financial Protection Bureau (CFPB) and its guidance, which has put a national microscope on pricing policies.
Kuhl pointed out that providers can avoid the vast majority of problems – including scrutiny by the CFPB - by sticking to a few basic rules. “Consumer litigation can usually be prevented if the contract (service, GAP, etc.) is clear as to its terms, coverage, etc. – so, the key is to have well-written agreements. Next would be to audit the price that the product is sold for (to the extent possible, and if pricing is controlled by the regulatory agency) to deflect any issues with over-pricing or discrimination, especially in light of the CFPB looking at this issue. But note – this is a touchy subject to the extent the provider does not want to dictate pricing unless it is regulated.”
Beyond the CFPB, Kuhl noted that there are other federal regulations providers need to be aware of. The Magnuson-Moss Warranty Act, for example, deals with how a warranty is structured and presented to consumers, something providers need to be very aware of. He also cautioned that providers need to know the difference between calling their product a “warranty” – which is included in the cost of the vehicle, and is not offered separately – and a “service contract” – which is purchased separate from the vehicle itself – which is an important distinction to make, in the legal world. Making sure the terminology used to describe every product is in compliance is a key factor to staying out of trouble.Looking Ahead
Kuhl doesn’t believe the push for more regulations is going to stop any time soon. He sees not only more legislation on the federal level, but on the state level as well. And on the heels of that increasingly strict regulatory environment, he foresees an increase in consumer litigation as the industry – and providers – work to keep ahead of the changes.
Another thing he pointed out is that he sees consolidation coming for providers. “I foresee - just my guess - that as the dealer body consolidates the dealers will consolidate who they do business with (including F&I providers) resulting in a consolidation or reduction in the number of providers. Having said that, every dealer is different in what they want from a provider – if the provider can distinguish themselves from the others and meet the needs of the dealer they will likely be okay. However, as the traditional dealer model matures and adjusts in size, I see opportunity for providers to expand into direct to consumer (if you do it right) via avenues such as private party sales and dealer-miss, as well as expand internationally. In addition, I think new products will be created that will address the evolving marketplace – and I can’t begin to guess what these products might be.”