What is the Risk-Based Pricing Regulation?
Effective January 1, 2011, the Federal Trade Commission (FTC) enforced the Risk-Based Pricing Regulation which may affect every dealership whether or not that dealership pulls a credit report on their customers. The regulation is intended to improve the accuracy of credit information by alerting those consumers who may have negative information existing on their credit file. Consumers are provided their score, how their score ranks nationally and some educational information on how to obtain a copy of their report and what to do if they find inaccurate information. This regulation is meant to complement the FCRA Adverse Action notice requirement which requires automotive dealerships to provide credit report information to those consumers whose credit applications were denied or did not qualify for the dealership’s best terms based on information contained within their credit report.
Our Solution
Following the National Automobile Dealers Association (NADA) and National Independent Automobile Dealers Association (NIADA) recommendations, 700Credit’s free solution uses the Exception Notice option, otherwise known as Model Form B-4 and Model Form B-5, for those instances where a score is not returned on the consumer. Anytime a credit report is retrieved through the 700Dealer System, a Risk-Based Pricing Score Disclosure Exception Notice is automatically generated. The Exception Notice must be delivered to the customer at or before consummation of the credit transaction or as soon as possible after the credit score has been obtained.
Additional features and options include:
- Automated Printing: The Exception Notice can be set up to automatically print at your default printer for each request.
- Credit Reports with No Score: 700Dealer will automatically generate the required Exception Notice in the event a score is not returned from the credit bureau.
- Mail House Program: Your dealership’s policies must ensure that every applicant for which a credit report was obtained receives an Exception Notice. 700Credit’s mail house solution will mail an Exception Notice to all applicants for which your users did not print the notice locally. This feature allows you to ensure every consumer receives an Exception Notice with proof of delivery.
- Historical Tracking: 700Credit tracks the date, time and the name of the individual who printed the notice locally or if the Exception Notice was printed by the mail house. This allows you to easily keep track of your dealership’s compliance. Reports are available that enable you to ensure every consumer receives an Exception Notice and satisfy any audit demands by the FTC.
