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Friday, March 22, 2013

CFPB Defines Authority on Auto Lender Discrimination

The CFPB released a bulletin explaining that indirect auto lenders that offer car loans through dealerships are responsible for unlawful, discriminatory pricing.

In the bulletin, CFPB Director Richard Cordray clarified the CFPB’s “authority to pursue auto lenders whose policies harm consumers through unlawful discrimination.”

The bulletin explains how the Equal Credit Opportunity Act applies to indirect auto lending, and it provides guidance on steps lenders can take to limit fair-lending risk.

Those steps include imposing controls on markup policies or revising them; monitoring and addressing the policies' effects; eliminating dealer discretion to markup buy rates; and fairly compensating dealers using mechanisms -- such as flat fees per transaction -- that don't result in discrimination.

Read the CFPB press release.

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