California AG Questions the "Charity" Behind Car Donation Organizations
California AG Kamala Harris, together with district attorneys for Los Angeles and Ventura counties, filed lawsuits against People's Choice Charities and Cars 4 Causes, including relevant officers and directors, for alleged violations of state laws on deceptive practices, unfair competition, fiduciary duties, and charitable trusts. The two charities solicit donations in the form of used cars, which they sell and then allegedly donate the proceeds to charities selected by the donors. The AG's complaints allege that the organizations (and related persons) spent proceeds from the sale of donated cars disproportionately on administrative and operational costs 97 percent for People's Choice; 87 percent for Cars 4 Causeswhile indicating to donors that the majority of the proceeds would go toward the designated charity. In addition, the complaints allege that both organizations falsely reported to state and federal tax authorities greater levels of donations to charities than they actually made. For example, the AG alleges that Cars 4 Causes reported $15.9 million was donated, but in reality gave $5.4 million. The complaints seek damages from both organizations, including punitive damages. In addition, the AG is seeking civil penalties under the California Business and Professions Code of $2,500 per violation, and is asking that both organizations be involuntarily dissolved. Consumer Financial Protection Bureau
Congress Pushes Back on CFPB Methodology
The Consumer Financial Protection Bureau (CFPB) has found itself under increased scrutiny by the U.S. House of Representatives' Financial Services Committee in the CFPB's attempts to assess racial discrimination in auto lending practices. The Committee issued a Report that faults the CFPB's decision to use disparate impact analysisa statistical estimation methodology that does not account for certain race-neutral factorsto determine whether auto lenders engaged in racial discrimination. The Report further alleges, through references and quotes from internal CFPB emails, that the CFPB was aware of the flaws in its method, but still went forward with enforcement actions against major auto lenders. The practice at the core of this issue is whether auto dealers (a group that is statutorily exempted from regulation by the CFPB) should be allowed to give discounts, or put markups on the rates offered by their...