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CFPB Taskforce Highlights NADA Fair Credit Program Among Its Recommendations

Jan 07, 2021

In January 2020, the CFPB Director appointed a Taskforce on Federal Consumer Financial Law to study and make recommendations on ways to improve consumer protections.  Earlier this week, the Taskforce issued its comprehensive report that contains a laundry list of recommendations to protect consumers, including several submitted by the National Automobile Dealers Association (NADA) and the National Association of Minority Automobile Dealers (NAMAD).

Of particular note to dealers, Recommendation 66 urges the CFPB and Federal Reserve Board to amend the Official Staff Interpretation of Regulation B (which implements the Equal Credit Opportunity Act) “to provide that good faith implementation of the [NADA/NAMAD/AIADA] Fair Credit Compliance Program or comparable program constitutes one method of preventing discrimination in pricing offered by retail sellers.” This recommendation recognizes that a dealer’s adoption of the optional NADA/NAMAD/AIADA Fair Credit Compliance Program should serve as a safe harbor against pricing discrimination claims.

The Taskforce offered other recommendations specific to auto dealers. These recommendations include the following:

  • The CFPB should not attempt to address concerns about credit discrimination by auto dealers through enforcement actions against dealer finance sources (Recommendation 64). Instead, the CFPB should enter into a Memorandum of Understanding with the Federal Trade Commission that recognizes FTC oversight over dealers in this area (Recommendation 86).
  • Streamline the adverse action notices consumers receive when their applications for credit are rejected, by eliminating the requirement for dealers to issue such notices when third party finance sources issue their own adverse action notice to the consumer (Recommendation 45).

These recommendations, and the many others made in the two-volume report, are being made by the CFPB as the Trump Administration wraps up its term.  It is unclear whether the CFPB, under a new leader appointed by the incoming Biden Administration, will embrace these recommendations, shift priorities in another direction or employ a combination of both.  NJ CAR will continue following developments at the CFPB and how they impact franchised dealerships.

You can read Volume 1 of the Taskforce Report HERE and Volume 2 of the Report HERE.