You don’t want to be an eager beaver.

 

When it comes to compliance, you definitely don’t want to be an eager beaver.

 

“WHAT?” you say?  I’m not recommending compliance?

 

That’s not really what I am saying.  Allow me to opine here.

 

An “eager beaver” is someone who works very hard, someone who is enthusiastic.  The derivation of the expression comes from a comparison of hard-working people, likening them to the industrious beaver.   However, let’s take a minute and talk about the animal, the beaver, behind the comparison.

 

Based on our human observations, a beaver appears to be a tireless animal, always working. Seemingly nothing can divert it from the task of building its fortress.  In truth, there’s a stealthier reality in play.

 

A beaver has a tail which has a series of complex sensors which can detect water flow.  (I’m not making this up.)  According to the interwebs, a beaver’s tail can sense water flow as slow as .3 centimeters per second and up to 250 liters per second.

 

When the water is flowing at 250 liters per second, log jams occur.  Large logs (and debris) are moved quickly through the streams.

 

That’s good for beavers.  This is the perfect speed and flow to move logs around.  Beavers wait for the right conditions and then they act.

 

So, in reality, beavers are not really eager at all. They are calculated, measured, and masters of the edict, “work smarter, not harder.” In fact, they only spring into action when the conditions allow their efforts to be as easy as possible.

 

With that in mind, let’s consider the past four (4) years and consider the regulatory environment.

 

On January 19, 2025, the day before Inauguration Day, the Federal Trade Commission (FTC) published the “FTC Accomplishments June 2021 – January 2025.”  It contains some very valuable information.

 

Here are a few of the highlights, both related to the automobile business and others of interest:

 

 

  • “Banned junk fees for short-term lodging and live event ticketing saving Americans more than 50 million hours per year in wasted time and $11 billion over the next decade… *
  • Banned auto dealers from sticking American consumers with junk fees – saving Americans nearly $3.5 billion a year and sued dealers for discriminating against Black, Latino, and Native American consumers with higher costs and fees. Return millions of dollars to consumers who are harmed…
  • Banned businesses from producing or purchasing fake reviews for products, leveling the playing field for honest businesses…
  • Pursued enforcement actions against the makers of Weber grills, Harley-Davidson motorcycles, and Westinghouse outdoor power equipment – saving Americans money and giving independent repair shops a fair shot to compete…
  • Urged the US copyright office to adopt regulations that would facilitate consumers’ and businesses’ right to repair their own products, a change that resulted in more easily fixable McDonald’s Mcflurry machines…(You will have better access to ice cream at McDonald’s because there will be more repair people available to fix the machines.)
  • Banned General Motors from sharing drivers’ precise geolocation data without their permission for five years, and the FTC’s first privacy action concerning connected cars…
  • Prohibited companies from retaining personal data longer than necessary and required them to curb lacks data security practices that left millions of Americans personal data exposed during data breaches – including breaches at Marriott hotels, home security camera companies Verkada and Ring, software company Blackbaud, online alcohol marketplace Drizly, online retail platform CafePress, web hosting company GoDaddy, and others…
  • Fined Epic Games $275 million – the largest COPPA penalty ever obtained for collecting kids’ personal information without their parents’ consent and for using default settings that expose kids and teens to bullying and harassment…
  • Fined Amazon $25 million for promising parents they could delete kids’ Alexa voice recording and geolocation data but then keeping it for years…
  • Fined Microsoft $20 million for illegal collecting kids’ data on its Xbox service without their parents’ consent…
  • For the first time in decades, proposed and finalized four Magnuson Moss trade regulation rules under section 18 of the FTC act: a rule prohibiting junk fees in the live- event ticketing and short-term lodging industries, a rule prohibiting the sale or purchase of fake reviews, a rule prohibiting government and business impersonation, and a rule prohibiting subscription traps…
  • Lindsay Auto (Dec. 2024): sued a Maryland auto dealer for charging consumers for unwanted junk fees and add-ons.
  • Leader Auto (Dec. 2024): reached $20 million settlement with car dealerships allegedly deceiving customers with bait and switch tactics and fake reviews.
  • Asbury Auto (Aug. 2024): sued a Texas auto dealer group alleging that it charged consumers for unwanted add-ons and discriminated against Black and Latino consumers by charging them with unwanted and higher priced add-ons.
  • Coulter Motor Company (Aug. 2024): secured $2.35 million in consumer redress from an Arizona auto dealer group for deceptive pricing, charging for unwanted add-ons, and discriminating against Latino customers.
  • Carshield (July 2024): ordered a vehicle service contract administrator to stop deceiving customers about which repairs were covered under the service plans.
  • Vroom (July 2024): secured $1 million in consumer refunds from online used dealer for falsely claiming it examined all vehicles before listing them for sale and failing to deliver cars on time.
  • Manchester City Nissan (Jan. 2024): sued a Connecticut auto dealer for deceiving consumers about the price of used cars, add-ons, and government fees
  • Rhinelander Auto (Oct. 2023): secured $1.1 million for consumer refunds after Wisconsin auto dealer group charged customers illegal junk fees and discriminated against American Indian customers by charging them a higher financing cost and fees.
  • Passport Auto (Oct. 2022): secured $3.3 million in consumer redress from an auto dealer group for charging consumers for unwanted add-ons and discriminating against Black and Latino customers by targeting them with higher financing costs and fees.
  • Napleton Auto (Apr. 2022): reached $10 million settlement with Illinois auto group for charging customers illegal junk fees and for discriminating against Black customers by charging them higher financing costs and fees.
  • Hey Dude Shoes (Sept 2023): fined online shoe seller $1.95 million for suppressing negative reviews and not shipping merchandise on time…
  • Roomster (Aug. 2022): banned a rental listing platform and its owners from buying consumer reviews after they flooded the internet with thousands of fake four and five star reviews for listings that turned out to be fake…
  • Fake Reviews Rule (…Aug. 2024): banned businesses from creating and purchasing fake online reviews, which deceive consumers and undermine honest businesses…
  • Safeguards Rule (…Oct. 2023): strengthened security safeguards for consumer financial data after their data is breached, and required non-banking institutions to report certain data breaches and other security events to the FTC…”

 

This sixty-five (65) page document is replete with FTC actions most of which I have not quoted here.  The list is substantial in its length and its reach.

 

In short, this indicates:

 

  • Over the past four (4) years, the FTC has attempted to regulate bad actors.
  • Even if any of the businesses above were not doing anything wrong, (and I don’t have any personal knowledge of any of these), there was enough smoke created, the FTC felt they had to act to put out the fire.
  • On the FTC press releases, at the bottom, they quote this: “The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest.”
  • The FTC found enough “reason to believe” to act.
  • The FTC found the above-mentioned companies somehow. How?  It’s my opinion, the FTC was contacted by upset or disgruntled customers.  How else would a company get on the FTC’s radar?
  • Business deception of any kind will not be tolerated by the FTC, if they hear about it.
  • Hopefully, the McFlurry machines will be fixed.

 

What can you do at your store to ensure they do not get into your business and cost you millions of dollars?

 

While some of the items above are not directly related to the automotive and RV industry, I think these cases are important to consider in running a dealership.

 

At the time of writing this article, the new administration is trying to shutter the Consumer Financial Protection Bureau (CFPB). Meanwhile, comparatively, it seems that it’s business as usual at the FTC.  The penalty for non-compliance has been raised for 2025 to $53,088. This is an inflation adjusted number which changes every calendar year.

 

Patty Covington, a financial services lawyer at Hudson Cook, posted on LinkedIn on February 9, 2025, “I caution folks to remember that nothing ever stays the same…and that states (AGs, DFIs and other regulators with jurisdiction) will rise up to fill the void they feel the federal governments is creating. I also point out that state legislators were active the last 4 years and that this trend is already continuing.  In fact, Chopra published a Compendium of CFPB activities(reports, guidance, proposed rules, enforcement etc.) – a roadmap for states to follow. He also published an article with Seth Frotman (attorney with the CFPB) on state enforcement as a federal legislative tool. Then there are the consumer advocacy groups that will never go away and never sit quietly. Finally plaintiff lawyers are always engaged, looking for the next class action. It’s time to remain vigilant and not take your eye off the proverbial compliance ball.”

 

As dealers, you may feel that you can be looser on compliance obligations under the current administration.  Consider regulators and government agencies are all “backward-looking.”  This concept means a business can be fined later for its behavior now.  The FTC operates this way, as well.

 

In the aggregate then, what does all this mean and what actions should you take?

 

Stay the course with your compliance efforts, avoid complacency, and be prepared:

 

  • The state Attorneys General are still very active.
  • Plaintiff lawyers are hungry and looking to sue dealers.
  • Your biggest risks are still with customer and employee problems.
  • The “backward-looking” paradigm will always be important to consider as the political climate is always evolving.

 

Conclusion?  It’s always the right time to consider your risk and compliance program.

 

Preventative measures are always less expensive than mitigative measures.

 

If your compliance structures are in place, and operating correctly, like a beaver, when the waters begin to rise around your dealership, the actions you’ll need to take will require far less effort. Additionally, warning signs of fast-moving threats will be detected with greater ease.

 

If you’ve done your homework and have all your sensors in place, when the floods come, you’ll be able to navigate the rushing water easily, calmly, and with aplomb…just like a beaver.