It’s clear the Consumer Financial Protection Bureau (CFPB) would like to increase regulation in the auto industry of what it calls “add-on” F&I products such as extended-service contracts and GAP.

But, according to Automotive News, it’s less clear whether the bureau can find the legal grounds to do it, according to former CFPB assistant director Rick Hackett.

The bureau’s problem is that an “invisible plastic dome” protects most dealerships, Hackett said during a webinar on Tuesday hosted by the National Auto Finance Association. Hackett is now a partner at Hudson Cook law firm.

Nearly all auto dealerships were exempted from the CFPB’s jurisdiction when the bureau was set up in 2010. Only buy-here, pay-here stores fall under CFPB oversight.

Despite the dealership exemption, the CFPB has managed to indirectly regulate retailers by cracking down on the auto finance participants it does regulate: auto lenders. Specifically, the CFPB is trying to get lenders to drop the practice of paying dealerships via dealer reserve.

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