GNYADA November 2014 Newsletter
2 Flat Fees Do Not Reduce Risk on Discrimination
that it was based on a legitimate, non-discriminatory factor. The NADA program fully incorporates the program created by the Department of Justice for two auto dealerships in 2007 to resolve fair credit cases. Last month, Marlin Stutzman (R- Ind.) and Ed Perlmutter (D-Colo.) introduced H.R. 5403, a bipartisan bill that would nullify the CFPB’s 2013 auto lending guidance. GNYADA continues to work with NADA to create fair lending practices in the industry. Log on to NADA at www.nada.org/cfpb for a copy of the Fair Credit Compliance Policy & Program. This article was contributed by Forrest McConnell, NADA Chairman, and Honda/Acura dealer in Montgomery, Alabama.
For over 100 years, consumers have benefited from fierce competition between local dealers, which in any given market drives down prices for car buyers both in and across brands. Plus, dealer-assisted financing has provided car buyers with competitive rates on auto financing. But the fed- eral government is trying to take away the right of car buyers to get discounted rates from dealers. In March 2013, the Consumer Financial Protection Bureau – with- out prior notice or public comment – issued guidance on indirect auto lend- ing that pressures finance sources to compensate dealers with a flat fee. The CFPB claims that negotiated interest rates between dealers and their customers can create a signifi- cant risk of discrimination. GNYADA and the National Automobile Dealers Association strongly oppose discrimination in any form and fully support the efforts of the CFPB, the Department of Justice, the Federal Trade Commission, and other federal agencies to eliminate it from the marketplace. However, a government-imposed flat-fee model would only serve to eliminate a con-
sumer’s ability to get a rate discount on auto financing. If the CFPB were to succeed in getting the industry to shift to an across-the-board flat fee compensation system, dealers’ incen- tive would shift to choosing lenders that pay them the highest flat fee, which in turn would frequently result in higher APRs for consumers. NADA Solution Addresses Credit and Competition Last January, NADA developed the NADA Fair Credit Compliance Policy and Program that provides a dealer with a mechanism to promote compliance with fair credit laws. The program was released in partnership with the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers. amount of dealer reserve earned in a transaction is supported by a legiti- mate business reason, such as the presence of a monthly budget con- straint, a more competitive offer, and inventory reduction considerations. The dealer documents each pricing decision so that it can demonstrate The voluntary program addresses fair credit risks by ensuring that the
Did You Know?
Monthly and annual inspections of all your fire extinguishers are required by OSHA. Undocumented and incomplete fire extinguisher tags can result in a $2,500 fine –EACH! The monthly inspections are visual only and can be performed by your dealership’s maintenance or safety person. These inspections ensure the extinguisher is undam- aged, the hose isn’t blocked, the safety seal is unbroken, and the operating instructions are legible. They also include a check of the pressure gauge to verify the device is fully charged. The month and year of these inspections, along with the initials of the person performing them, must be recorded on the each extinguisher's hang tag.
Greater New York Automobile Dealers Association • www.gnyada.com
The Newsletter • November 2014
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