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American Bar Association Promotes Adoption of NADA Fair Credit Program

Sep 03, 2020

In August, the American Bar Association approved a resolution that, in part, urges governments at all levels to:

Adopt laws and policies that promote the adoption of an enhanced nondiscrimination compliance system for dealer compensation for arranging and/or originating a vehicle finance contract by offering a safe harbor against pricing discrimination claims for dealers that faithfully implement the NADA/NAMAD/AIADA Fair Credit Compliance Policy and Program.

The resolution recommended “safe harbor” protection to dealers who faithfully adopt the NADA/NAMAD/AIADA fair credit program in lieu of a recommendation that governments consider requiring dealer finance compensation to be in the form of a non-discountable fixed fee. This was one of several significant improvements to the original resolution, which sought to impose a series of new duties and restrictions on the dealer finance office.

In New Jersey, State legislators and the Murphy Administration are likely to pursue this issue and plaintiffs’ attorneys are chomping at the bit to potentially earn a big payday at the dealers’ expense.  Accordingly, NJ CAR continues to encourage dealers to be proactive and consider, in consultation with their counsel, whether to implement the NADA/NAMAD/AIADA Fair Credit Compliance Policy and Program. Adoption of this program now could minimize vulnerability to future government enforcement actions and/or civil lawsuits. The program, along with supporting materials, is available at