NADA Fair Credit Guidance

Treating customers in a fair and consistent manner and abiding by all anti-discrimination laws is central to the mission and success of the NADA dealer members. NADA, in collaboration with the American International Automobile Dealers Association (AIADA) and the National Association of Minority Automobile Dealers (NAMAD), designed the optional Fair Credit Compliance Policy & Program to strengthen a dealer's ability to comply with fair credit laws while preserving the competitive consumer benefits of dealer-assisted financing. 

Background 
The optional program is modeled on the approach set forth in consent orders that the Department of Justice (DOJ) entered into with two automobile dealerships to settle pricing discrimination claims in 2007. The program helps dealers to establish a Fair Credit Policy for their own dealerships and creates a general framework for promoting compliance with fair credit laws. Dealers who adopt the program establish a standard dealer participation rate (dealer reserve) for customer credit offers, and only discount for pre-set and pro-competitive reasons.

Steps to Compliance
There are several important steps to carrying out the program. A dealership should consult the program and the program overview and work with an attorney familiar with applicable federal, state, and local law and their operations to determine appropriate fair credit compliance procedures for their business to adopt.

Maintaining the Program 
As with any regulatory compliance program, ensure the dealership’s Fair Credit Program is continuously carried out and adjusted as necessary to meet its objective of strengthening the dealership’s efforts to comply with fair credit laws.

Program Accolades
Leading industry compliance attorneys endorse this approach to fair credit compliance. 

“The NADA/NAMAD/AIADA Fair Credit Compliance Policy & Program is very well thought out and an effective way for dealers to manage their ECOA risk in pricing credit to customers.” – Jean Noonan, Esq., Hudson Cook, LLP 

“To survive and thrive in today’s regulatory environment, dealers absolutely need to adopt a fair credit policy and use it every day with every deal. The NADA/NAMAD/AIADA Fair Credit Compliance Policy & Program is an excellent tool for doing just that.” – Halbert B. Rasmussen, Esq., Arent Fox LLP 

“Every dealer should adopt the NADA/ NAMAD/AIADA Fair Credit Compliance Policy & Program. It is based upon established law which will protect dealers from liability. The NADA/NAMAD/AIADA program is an excellently designed program and its implementation by any dealer should be relatively simple.”  – Terrence J. O’Loughlin, J.D., M.B.A. Reynolds and Reynolds 

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It is essential that dealers read the caveats and disclaimers contained within the downloadable documents and consult with their counsel when making decisions related to fair credit compliance.