BHPH Dealers Under Scrutiny by California Senate Debate & Ohio AG
SACRAMENTO, Calif. — Regulatory and judicial actions against the buy-here, pay-here industry are gaining significant momentum as legislative debate heats up in California, Ohio’s attorney general reveals lawsuits and the Consumer Financial Protection Bureau begins to probe a nationwide BHPH store chain.
The latest development came Tuesday when the California Senate’s Judiciary Committee spent part of a its weekly meeting discussing SB 956, the Buy-Here-Pay-Here Automobile Dealers Act. Sen. Ted Lieu, the bill’s author, again testified before the committee, reiterating his stance on how BHPH stores prey on economically disadvantaged consumers.
“My measure, Senate Bill 956, would regulate this unregulated industry.” Lieu told the committee. “SB 956 contains numerous consumer protections, such as capping the interest rate, putting these dealerships under the regulation of the Department of Corporations and subjecting the dealership to the protections of the California Finance Lenders law.
“Buy-here, pay-here dealers are the Wild West of used-car dealerships, and it is time they are brought under control,” he added.
When the committee allowed a brief opportunity for opponents to voice opposition, one BHPH advocate asked this question:
“How can you have one entity licensing two entities — used-car dealers or buy-here, pay-here dealers and commercial finance lenders — but the commercial finance lenders aren’t regulated for interest caps but the used-car dealer is? I don’t understand the equity in that. I’d like to find out what that’s all about,” the questioner told the committee.
Before the committee’s latest meeting, bill opponents made their case against the measure in nonpartisan analysis delivered to the Senate. The analysis contained comments from BHPH stores as well as the National Alliance of Buy-Here Pay-Here Dealers and the National Independent Automobile Dealers Association.
Both NABD and NIADA tried to inform legislators about the nature of the business, how the federal funds rate plus a 17-percent interest rate cap would stifle the efforts of finance companies that offer credible, alternative financing programs to unbankable consumers.
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