The National Automobile Dealers Association and the NationalAssociation of Minority Automobile Dealers have issued a jointstatement questioning the Consumer Finance Protection Bureau'slatest guidance on indirect auto lending.

On Thursday, the CFPB released a bulletin on compliance for indirect auto lenders that permits dealers to increase consumerinterest rates and compensate them with a share of the increasedinterest revenues.

The CFPB said it was concerned that the markups may lead tominorities being charged more than white consumers.

“NADA and NAMAD strongly oppose any form of discrimination inauto lending, and the CFPB guidance appropriately explains thatunlawful discrimination has no place in the marketplace,” the tradegroups said in a statement.

“However, it is relying on a theory of discrimination that isbased on a statistical analysis of past transactions – notintentional conduct – and the CFPB has not provided any informationabout how it is conducting its analysis,” NADA and NAMAD said.

The CFPB said indirect auto lenders should take steps to ensurethat they are in compliance with the Equal Credit Opportunity Actand Regulation B including eliminating dealer discretion to mark upbuy rates and fairly compensating dealers using another mechanism,such as a flat fee per transaction, that does not result indiscrimination.

“An indirect auto lender's markup and compensation policies mayalone be sufficient to trigger liability under the ECOA if thelender regularly participates in a credit decision and its policiesresult in discrimination. The disparities triggering liabilitycould arise either within a particular dealer's transactions oracross different dealers within the lender's portfolio,” the CFPBsaid.

NADA and NAMAD said “the CFPB's attempt to eliminate thedealer's ability to discount the APR that it offers to consumerswill only weaken the consumer's ability to secure financing at thelowest possible cost.”

The groups added “this anti-competitive approach is not in theinterest of consumers and should not be accomplished throughguidance and enforcement actions that lack transparency, theopportunity for public comment, and the benefits of a data-drivenanalysis into the effects they would have on consumers and theautomobile financing marketplace.”

Both auto industry trade groups said the CFPB should work withthe Federal Reserve Board and the Federal Trade Commission on thosevarious actions.

NADA said it represents nearly 16,000 new-car and -truckdealers, with 32,500 franchises, both domestic and international.NAMAD, which represents minority-owned dealerships, said of the19,000 new auto dealerships, less than 1,100 are owned byminorities.