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Court rebuffs dealer lawsuit over Risk-Based Pricing Rule notice

May 25, 2012
A lawsuit seeking to relieve automobile dealers from purchasing customer credit reports for no other reason than to comply with the federal Risk-Based Pricing Rule was rejected May 22 by a U. S. district court.
The National Automobile Dealers Association had challenged the broad interpretation by the Federal Trade Commission of the RBPR, which applies to persons who, among other requirements, “use” a credit report in particular credit transactions.
The FTC said last year that dealers engaged in three-party vehicle financing transactions who do not obtain, receive, or review a credit report nevertheless “use” a credit report based on the finance source’s use of a credit report and therefore are responsible for complying with the RBPR’s notice requirement.
The NADA argued that the FTC interpretation of the rule was flawed, but the U.S. District Court for the District of Columbia saw otherwise. Regardless of which party prevailed at the district court level, the NADA anticipated that the other party would appeal the decision to the D.C. Circuit Court of Appeals. The NADA will now direct its outside counsel to file an appeal and will report on further developments.