Along with its proposed larger participant rule for the auto financing market, the CFPB recently issued a special edition of Supervisory Highlights (“report”) describing its fair credit supervisory activity in what it characterizes as “the indirect automobile lending market.”

The report indicates that CFPB supervisory examination teams have been conducting targeted Equal Credit Opportunity Act compliance reviews of “indirect auto lenders.  “This is the segue into the surprising news that multiple targeted ECOA reviews conducted during the last two years have resulted in non-public, supervisory resolutions with several auto “lenders” involving approximately $56 million in redress for approximately 190,000 consumers.

The report includes numerous assertions and observations drawn from supervisory examinations.  It also explains the CFPB’s use of the hybrid Bayesian Improved Surname Geocoding (BISG) methodology to proxy for unidentified race and ethnicity in the non-mortgage context.  The report was accompanied by a white paper explaining this proxy methodology in further detail and reporting that a study conducted by the CFPB had concluded that this “integrated approach to building a proxy is more accurate than either surname or geographic data individually.”

Our legal alert containing a detailed discussion of the report and the white paper on the BISG proxy methodology is available here.  On October 16, 2014, Ballard Spahr attorneys will discuss these developments in a webinar, “Auto Finance II: Fair Credit,” from 12:00 p.m. to 1:00 p.m. ET.  The registration form is available here.