Compliance with federal rule will be no-brainer

Donna Harris covers automotive retailing for Automotive News.
The federal Risk-Based Pricing Rule, designed to give consumers with below-average credit the ability to shop around for the most favorable credit terms, takes effect Jan. 1, 2011.

Though it’s a complicated regulation, it looks like compliance is going to be a no-brainer for two reasons: There’s a compliance shortcut available, and technology vendors are making compliance almost automatic.

With a nudge from the National Automobile Dealers Association, the Federal Reserve and the Federal Trade Commission developed an easy way for dealerships to comply with the rule. It’s a notice disclosing the customer’s credit score, how the score compares to the scores of other consumers, how to obtain a credit report and how to correct errors in a credit report.

Dealer management systems providers and vendors involved in credit processing also are embedding the notice requirement in their software so that dealers just have to print out the notice as part of the ordinary course of pulling a credit bureau report or submitting credit applications to lenders. The form will automatically be completed with the customer’s information.

Some of the vendors -- such as DealerTrack, RouteOne and Credco Services --are providing this service free to their dealer clients. The F&I manager just gives a copy to customers between the time they apply for credit and sign off on financing.

Sure, this new requirement will mean yet another paper in the deal jacket. But it’s a lot better than it could’ve been.

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