insideARM Weekly Recap – Week of October 14th, 2024

News in the ARM industry moves at lightning speed; determining what's important and what’s just noise can be challenging. This is why the editorial team at insideARM sifts through all the news and brings you the need-to-know highlights.  

On Tuesday, we published the CFPB's Fall 2024 Supervisory Highlights report. It focuses on examinations of the auto-finance market from November 2023 to August 2024. Key findings include deceptive practices in auto loan marketing, inaccurate prepayment penalty disclosures, and wrongful repossessions despite consumers making payments. The report also highlights issues with servicing practices such as improper payment allocation, delayed title delivery, and mishandling of add-on products, including unauthorized charges and failure to provide refunds. Additionally, deficiencies in credit reporting, including delayed corrections of inaccurate information, were noted. The CFPB's focus remains on ensuring consumer protection and compliance in the auto-finance sector. Although this highlight has a focus on auto financing, their comments may affect other types of debt. 

On Wednesday, we shared analysis on the state of AI due diligence in the M&A market. It requires a risk-focused approach, where the emphasis is on addressing concerns about potential risks rather than the benefits of AI tools. To navigate this process successfully, companies should establish clear precedents in three key areas: tracking AI tools, adopting relevant policies, and ensuring oversight. Tracking involves documenting AI usage and related contracts, while policies should include reasonable use guidelines for employees. Oversight, housed in a department like legal or the C-suite, ensures adherence to these policies. Addressing these elements helps companies meet the strict risk assessments common in AI due diligence. 

Finally, we shared an update from the Department of Labor. Starting January 1, 2025, the minimum salary for white-collar exemption under the Fair Labor Standards Act (FLSA) will increase to $1,128 per week ($58,656 annually), up from the current $844 per week. This $15,000 jump in the minimum annual salary for exempt employees has prompted legal challenges in Texas and Tennessee, but recent court rulings suggest these challenges are unlikely to succeed. In September 2024, the Fifth Circuit upheld the DOL's authority to raise salary thresholds, affirming similar decisions from other circuits. Employers should prepare for this substantial increase to ensure proper employee classification and compensation. 

As always, we thank you for reading the weekly recap to stay on top of this ever-changing industry! For a breakdown of the week of October 7th, click here.