Intensified Auto Service Contract Investigations Have Powersports Industry on Watch

Leadership change and policy rollback at the Consumer Financial Protection Bureau have powersports companies watching closely to inform their own programs, Travis Wools, vice president of marketing for Protective Asset Protection, told Powersports Finance.

“There’s a lot going on in the space, and I think a lot of head-scratching, at least to dealers and independent agencies,” Wools said.

Protective Asset Protection provides F&I products to automotive and powersports dealers. Service contracts, in particular, have been in federal and state regulators’ crosshairs, with investigations related to refunds of guaranteed asset protection policies at Ally Financial Inc. and Wells Fargo Auto.

In the powersports space, service contracts are the most popular products issued by Protective Asset Protection, and the cost of those contracts gets “rolled” into the loan.

“We have to have our products approved by many lending authorities and bodies to make sure that their company is set, so that when the paperwork gets sent to the lender, they are familiar with the contract,” Wools said. “We have a legal team that’s constantly reviewing what’s going on at a state-by-state basis, because that tends to be where the bulk of the regulatory changes come into play.”

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