Federal Update
• The Consumer Financial Protection Bureau has issued regulations revising the summary of Consumer Rights Form that must be used by employers who do background checks. Under the Dodd-Frank financial reform legislation, the CFPB replaced the FTC as the primary rule-making and enforcement authority for background checks of individuals under the Fair Credit Reporting Act. Under the Act, an employer who requests a credit report or an investigation into the background of applicants and employees must obtain permission in a form that contains no other substantive information. Before taking adverse employment action against an applicant or an employee as a result of information gathered (or in cases of investigative background checks not generally performed by dealers), the employer must provide an individual with a notice of that fact including a copy of the consumer report and a copy of a document known as “Summary of Consumer Rights”. Effective January 1, 2013, the CFBP has changed the “Summary of Consumer Rights” form to make clear that it is the enforcement agency and not the FTC. Consequently, employers who use a background check procedure under the FCRA must use the new form effective January 1, 2013.
• The CFPB has announced new Truth in Lending Act and Consumer Leasing Act thresholds for 2013. For years, the TILA and the CLA applied only to consumer credit extended for $25,000 or less. The Dodd-Frank Act changed that threshold to $50,000, and the threshold is indexed for inflation. As of January 1, 2013, the threshold for application of the TILA and CLA is $53,000. Consequently, any extension of credit or lease for $53,000 or less will be subject to TILA and CLA and can be the basis for a finding of liability for violation of the requirements of those laws.
• The deadline for notifying customers whose transactions in 2012 led the dealership to file IRS Forms 8300 regarding the receipt of cash in excess of $10,000 is January 31, 2013. The dealership should ensure that all customers with reported transactions have been or are notified of the filing. And, while the dealership is considering notification of customers, it should also determine if it has filed all the required IRS 8300 returns for the year. Even though an IRS 8300 filing may be late, a late filing is much better than no filing whatsoever