I’m Free

How did you feel on:

• The last day of school before summer vacation?
• After finalizing your divorce?
• Pressing "submit" on a large application or proposal?
• Paying off a loan?
• After filing your taxes?

You felt amazing! You felt alive and without responsibilities! Ahhhh!

Some dealers felt this way when the current President was elected. They felt it was going to be a golden era where they would make lots of money and be free of regulatory interference.

Hopefully, all dealers are always making lots of money. As for the lack of regulatory enforcement? Nothing could be further from the truth – regulators are engaged and looking for bad actors (or alleged bad actors).

Most business owners would never consider themselves as a "bad actor," because they never intended to harm anyone (with an emphasis on "intent.") Lawyers and regulators have no concern over this notion. They act when they see what they perceive as harm.

There are both political and legal forces at play here. Let's start with the politics.

Number One:

The Wall Street Journal recently reported that "America's two political parties have traded places economically. Where American once referred upper-income 'country club Republicians' and blue-collar 'lunchpail Democrats,' they now see a working-class GOP and, in many ways, a professional-class Democratic Party"¹ Said differently, the Republican party has become more populist.

This populism means the party will need to respond to claims which affect "the small guy." That means, alongside removal of many regulatory barriers, the Republicans will have to walk a fine line about enforcing laws, rules, and regulations that would protect "the little guy."

You may not agree here and we can agree to disagree. But there's more.

Number Two:

On January 15, 2025, Rohit Chopra – former Commissioner of the Federal Trade Commission and the third Director of the Consumer Financial Protection Bureau – and Seth Frotman wrote an article entitled "State Enforcement As A Federal Legislative Tool," for the Harvard Journal On Legislation.

They make the argument (in thirty-eight pages) as a result of the 2008 Consumer Financial Protection Act ("CFPA") that "Among the most important features of the CFPA is its embrace of cooperative federalism."²

Cooperative federalism is a term which means that states may enforce federal laws thereby expanding states into more policy areas.

The article further asserts that there is "wide, bipartisan success that state law enforcement has had in bringing claims against consumer finance companies."³ In this way, states can enforce laws "that have not yet, or may never become a subject of significant federal action."⁴

This means that the "attorneys general and other appropriate regulators of states, territories, and Indian tribes-the ability to enforce federal consumer financial protections without being beholden to the priorities of federal agencies."⁵

I'll save you from reading the entire thirty-eight pages. Their conclusion is ultimately these forces produce "a more rigorous and comprehensive framework for consumer financial protection."⁶ Further, this has "helped states redress for a far greater set of actors and conduct than they otherwise would be able, and to secure fuller relief when doing so."⁷ (In this sense, "relief" directly equates with "dollars.")

Number Three:

Historically, and as I've written before, when the federal government is light on enforcement, the state Attorneys General take up the slack and step up to tighten enforcement.

So what's a dealer to do? I have an answer.

I recently read an Opinion piece in the Washington Post entitled "I just graduated with a philosophy degree. Here's my message to the Class of 2025." In it, the author, Clary Doyle points out that "Philosophers are less concerned with finding the right answers and more concerned with asking the right questions."⁸

First, ask questions of yourself and your dealership practices. What controls do I have in place to catch problems? Here's a great one: Pull the top three (3) grossing deals – new or used – and crawl through the paperwork. Do you see anything amiss? How did your team pull off that deal? Were they honest in their disclosures? Did they tell the truth? Are all the signatures the same or do a few look forged?

Query your department managers and find out what problems they are having. Can you help here? Room for improvement? Can you fix the problem? Is the problem endemic or is it isolated? If it is endemic, can you install a policy or procedure so it won't happen again?

And what happens when these problems go unattended? Here's an example:

"Tina McPherson bought a used vehicle from Suburban Ann Arbor, LLC. After the papers were signed and title was transferred to McPherson, Suburban attempted to unwind the transaction when her financing was not approved, tried to compel her to accept different financing terms, and then repossessed the car when she did not agree."⁹

McPherson sued and was awarded $38,000 in actual damages and $350,000 for punitive damages to punish the dealership for its conduct. The dealership tried to have the punitive damages removed or reduced and the court denied their request. "The court noted that the punitive damages were a multiple of 9.2 over the compensatory damages, within the single-digit multiple that courts have found complies with due process."¹⁰

So, remember if you are managing a problem with a $100,000 vehicle, that claim could easily be a $1 million excluding attorney's fees.

In this case, the judge ruled that this conduct "was not an exception or mere happenstance, but instead represented 'business as usual.'"¹¹

Here's another example of why having a Compliance Management System (CMS) can save you money and you can have that "we're free," feeling. If you can show a judge or regulator that mistakes are anomalies, and not your policy, it's as good as a "Get Out of Jail Free" card in Monopoly.

But you have to show that (1) you care, (2) are trying to comply, and (3) you made a mistake in this one instance. I cannot think of a recent enforcement action where the dealer was trying to comply and still was hammered like Suburban was as shown in this recent article.

So, yes, freedom feels great. You may feel free from scrutiny and free to make money without anyone telling you what to do. Until…someone tells you what to do.

Dealers who run toward compliance, with the right systems, the right questions, and the right mindset will be rewarded with sleeping better, because they are knowingly and actively protecting their business.

It's like body armor for your business and that's the feeling of "I'm free."

1. ^{Wall Street Journal, "The Problematic Politics of Trump's Bill: More Lower-Income Americans Are Voting GOP," by Aaron Zitner, Anthony DeBarros, and Danny Dougherty, July 2, 2025}
2. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
3. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
4. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
5. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
6. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
7. ^{Harvard Journal On Legislation, "State Enforcement As A Federal Legislative Tool," by Rohit Chopra and Seth Frotman, January 15, 2025.}
8. ^{Washington Post, "I just graduated with a philosophy degree. Here's my message to the Class of 2025." June 25, 2025.}
9. ^{Spot Delivery, "Reprehensibility of Dealership's Conduct Warrants Punitive Damage Award of More than Nine Times Compensatory Damages," by Shelley B. Fowler, June, 2025.}
10. ^{Spot Delivery, "Reprehensibility of Dealership's Conduct Warrants Punitive Damage Award of More than Nine Times Compensatory Damages," by Shelley B. Fowler, June, 2025.}
11. ^{Spot Delivery, "Reprehensibility of Dealership's Conduct Warrants Punitive Damage Award of More than Nine Times Compensatory Damages," by Shelley B. Fowler, June, 2025.}