‪(480) 285-8227 dave@dealercomply360.com

Regulation B (Equal Credit Opportunity) Compliance Policy

Purpose:
This policy ensures that [Dealership Name] complies with Regulation B, which implements the Equal Credit Opportunity Act (ECOA). The policy prohibits discrimination in credit transactions and establishes procedures to ensure fair treatment of all credit applicants.

1. General Policy Statement

[Dealership Name] is committed to compliance with Regulation B to promote equal access to credit for all customers. The dealership prohibits discrimination based on prohibited factors and ensures that all credit decisions are made fairly, consistently, and in compliance with the law.

2. Scope

This policy applies to all employees involved in financing, credit applications, and decision-making processes, including sales and finance staff.

3. Responsibilities

3.1 Compliance Officer

  • Ensures dealership practices align with Regulation B.
  • Reviews credit applications and decisions for compliance.
  • Provides training to employees on Regulation B requirements.

3.2 Finance Team

  • Processes credit applications without bias or discrimination.
  • Issues required notices, such as adverse action notices, in a timely and compliant manner.

3.3 Sales Team

  • Treats all customers fairly and equally during the sales process.
  • Avoids discouraging or steering customers based on prohibited factors.

4. Policy Provisions

4.1 Prohibited Discrimination

Employees may not discriminate against any credit applicant based on:

  • Race or color.
  • Religion.
  • National origin.
  • Sex or gender identity.
  • Marital status.
  • Age (provided the applicant has the legal capacity to contract).
  • Receipt of income from public assistance programs.
  • Exercise of rights under the Consumer Credit Protection Act.

4.2 Handling Credit Applications

  • Consistent Application Process:
    • All credit applicants must complete the same standard application.
    • Employees may not discourage or steer applicants based on any prohibited factors.
  • Spousal Protections:
    • Applicants cannot be required to provide their spouse’s information unless the spouse is a joint applicant or their information is needed to secure the loan (e.g., shared property).

4.3 Adverse Action Notices

If a credit application is denied or approved with less favorable terms, the dealership must:

  • Provide an Adverse Action Notice within 30 days of the credit decision.
  • Include the following in the notice:
    • Specific reasons for the denial or a statement that the applicant can request this information.
    • The name, address, and contact information of the credit reporting agency (if applicable).
    • A statement of the applicant’s rights under ECOA.

4.4 Record Retention

  • Retain all records related to credit applications for a minimum of 25 months, including:
    • Completed credit applications.
    • Adverse Action Notices.
    • Correspondence and supporting documentation for credit decisions.

4.5 Collecting Demographic Information

  • Collect demographic information only when required by law (e.g., Home Mortgage Disclosure Act) or specific monitoring programs.
  • Such information must not be used in making credit decisions.

4.6 Special Purpose Credit Programs

  • The dealership may participate in special-purpose credit programs aimed at helping underserved groups, provided they comply with Regulation B and ECOA requirements.

5. Prohibited Practices

  • Discouraging individuals from applying for credit based on a prohibited factor.
  • Asking for information about an applicant’s spouse unless legally required.
  • Refusing to consider public assistance or part-time income as valid sources of repayment.
  • Failing to provide required notices, such as adverse action notifications.

6. Monitoring and Auditing

  • Conduct periodic audits of credit applications, decisions, and notices to ensure compliance with Regulation B.
  • Monitor for patterns of potential discrimination and address issues promptly.

7. Penalties for Non-Compliance

Non-compliance with Regulation B may result in:

  • Civil penalties, including fines and damages.
  • Regulatory action or lawsuits.
  • Reputational harm to the dealership.
  • Disciplinary action for employees found in violation, up to and including termination.

8. Employee Training

  • Provide initial and ongoing training to all employees involved in credit transactions on:
    • Regulation B requirements and prohibited practices.
    • Proper procedures for handling credit applications and adverse action notices.

9. Policy Updates

This policy will be reviewed and updated annually, or as changes to Regulation B, dealership practices, or regulatory requirements occur.

Acknowledgment
I acknowledge that I have read and understand the Regulation B Compliance Policy and agree to abide by its provisions.

Employee Signature: ___________________________
Date: ___________________________

Manager Signature: ___________________________
Date: ___________________________

This policy ensures compliance with Regulation B, promotes fairness in credit transactions, and protects consumers and the dealership from legal and reputational risks.