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#2113516 - 01/09/17 06:31 PM Receive a Gas Card with a Car Loan
Compliance1 Offline
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What issues does one see with offering a gas card to customers who get a car loan over $20,000? I know what concerns I have but wanted to see if I am thinking correctly.

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#2113580 - 01/09/17 09:50 PM Re: Receive a Gas Card with a Car Loan Compliance1
Compliance1 Offline
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Posts: 650
So, no one sees any issues with only providing a gas card only to loan customers whose loan is greater than $20,000?

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#2113582 - 01/09/17 09:58 PM Re: Receive a Gas Card with a Car Loan Compliance1
Norman Paperman Offline
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Norman Paperman
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A bit passive but what is your argument (business reasoning) for not offering the gas card to those under $20,000?

This should answer your question.
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Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


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#2113585 - 01/09/17 10:25 PM Re: Receive a Gas Card with a Car Loan Norman Paperman
Compliance1 Offline
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Thank you Norman that is what I am getting at. When I first saw that the Bank only wanted to give a gas card to only loans $20,000 and higher I immediately thought unfair and probably not the best idea in order to avoid fair lending issues, UDAAP, etc...

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#2113588 - 01/09/17 10:38 PM Re: Receive a Gas Card with a Car Loan Compliance1
Norman Paperman Offline
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I would definitely lean toward fair lending, but I think the natural question you get from an examination team would be for you to successfully make the case for why $20,000 is your threshold. If you can make the case, you would likely escape criticism, but you need to know that is coming. How much is the card? Is there a profit margin that you need to hit to offset the cost of the card?

Cost of funds? Interest rate? Other fees?
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

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#2113631 - 01/10/17 03:41 PM Re: Receive a Gas Card with a Car Loan Norman Paperman
Compliance1 Offline
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Posts: 650
The gas card would be for $100 and then the customer would get 100 days before their first payment. The 100 days would essentially accumulate interest that would then offset the $100 gift card with the loan amount being at $20,000. In turn the promotion would cost us anything.

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#2113634 - 01/10/17 03:50 PM Re: Receive a Gas Card with a Car Loan Compliance1
Norman Paperman Offline
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Norman Paperman
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Sounds like one heck of a disclosure problem. I certainly hope you would be advising the customer that the 100 days of no payment is accruing interest. Smells like UDAAP to me.

I realize you are likely taking orders and trying to make this thing compliant. Voice your concerns and press management on why the $20,000 is an important threshold. Why couldn't you offer it to all borrowers if the 100 days is paying for the cost of the card?

Do your best to disclose all of these hurdles and make sure the customer knows what they are signing up for. I'd avoid the word free as well.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

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#2113660 - 01/10/17 05:20 PM Re: Receive a Gas Card with a Car Loan Norman Paperman
Compliance1 Offline
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Joined: Mar 2006
Posts: 650
The accruing of interest in disclosed with in their documents already. The concept of the threshold is due to the fact that interest on a $3,000 auto loan wouldn't cover the cost of the $100 gas card. I have told them to drop the threshold and allow the card to be given to all auto loan borrowers regardless of dollar amount.

Hopefully that covers it.

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