CFPB lets lenders decide the fate of the auto dealer rate mark ups but outlines expectations

April 2013
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CFPB lets lenders decide the fate of the auto dealer rate mark ups but outlines expectations

At a glance

The Consumer Finance Protection Bureau (CFPB) released a bulletin that outlines their intent to hold indirect auto lenders responsible for compliance with fair lending requirements of the Equal Credit Opportunity Act regarding dealer interest rate mark ups, participation and reserves.

On March 21st, 2013, the CFPB released a bulletin outlining their intent to hold indirect auto lenders responsible for compliance with fair lending requirements of the Equal Credit Opportunity Act related to dealer interest rate mark ups, participation and reserves.

The CFPB has implemented these requirements due to the significant risk that they will result in pricing disparities on the basis of race, national origin and potentially other prohibited bases. Although the Bureau did not altogether ban the practice of dealer mark ups, it did recommend lenders consider fairly compensating dealers using alternative methods, such as a flat fee per transaction, which do not result in discrimination disparities.