Pub. 3 Issue 1

9 SPRING 2015 lacks a legitimate business explanation for earning different amounts in its credit transactions. Fortunately, NADA has identified a way forward that ad- dresses both fair credit and competition considerations. Last January, the association developed the NADA Fair Credit Compliance Policy and Program that provides a dealer with an optional mechanism to promote compliance with fair credit laws. The program was released in partnership with the American International Automobile Dealers Association (AIADA) and the National Association of Minority Automo- bile Dealers (NAMAD). The voluntary program addresses fair credit risks by ensuring that the amount of dealer reserve earned in a transaction is supported by a legitimate business reason. A dealer following the program sets a standard starting point for dealer reserve that it includes in its credit offers to consumers and only deviates from that rate for predetermined, legitimate busi- ness reasons. These include the presence of a monthly budget constraint, a more competitive offer, and inventory reduction considerations. The dealer documents each pricing decision so that it can demonstrate that it was based on a legitimate, non-discriminatory factor. The NADA program fully incor- porates the program created by the Department of Justice for two auto dealerships in 2007 to resolve fair credit cases. By creating this structure and supporting it with appropriate training and oversight, the NADA program provides a mecha- nism for addressing fair credit concerns at the consumer, dealer, and lender levels. Reps. 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”. The bill would require new CFPB guidance involving auto financing to be transpar- ent and open to public participation. Already 118 Members of Congress (46 Democrats and 72 Republicans) in the U.S. House of Representatives have committed to cosponsor or are cosponsors of this important measure. For more information, visit www.nada.org/cfpb. The NADA Fair Credit Compliance Policy & Program presents the industry with a realistic and effective means of addressing fair credit risks at all levels and in a manner that preserves robust competition in the marketplace. The federal government should encourage its broad adoption. [The preceding was Commentary authored by NADA Director For- rest McConnell.] NADA Releases New Video on the Benefits of Price Competition in Auto Retailing Fierce competition among America’s franchised auto dealer- ships benefits car buyers by driving down retail costs on both vehicle prices and financing rates. NADA is promoting this message in a new animated video recently released as part of its “Get The Facts” initiative. The video, entitled Get the Facts: Benefits of Price Competition, details how car buy- ers benefit when multiple dealers compete for their business. It also addresses how dealers, particularly those that have relationships with multiple lenders, can often provide car buyers with better financing rates than they can get on their own. The video also addresses several misconceptions about automotive retailing. NADA’s “Get The Facts” initiative is designed to inform policymakers, opinion leaders, and the media about the numerous benefits of the dealer franchise network through a variety of multimedia resources and videos available at www.nada.org/GetTheFacts.  NADA Director’s Update — continued from page 8 