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Fed delays requirement for dealers on data collection, reporting rules

September 30, 2011
The Federal Reserve Board on Sept. 20 issued a final rule amending Regulation B to temporarily exempt motor vehicle dealers from complying with new data collection requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act, until the Board issues final regulations to implement the statutory requirements.
The Dodd-Frank Act amended the Equal Credit Opportunity Act to require creditors to collect information about credit applications made by women- or minority-owned businesses and by small businesses. The Consumer Financial Protection Bureau must implement this provision for all creditors except certain motor vehicle dealers who are subject to the Board’s jurisdiction.
The CFPB previously announced that creditors are not obligated to comply with the data collection requirements until the CFPB issues detailed rules to implement the law. The Board is amending Regulation B to apply the same approach to motor vehicle dealers.
Without the exemption, dealers would have had to inquire into whether a credit applicant is a small business or a women-owned or minority-owned business and to maintain a record of responses to the inquiry that is separate from the credit application.
If an applicant responds affirmatively to the inquiry, the financial institution must then:
• compile and itemize eight fields of data related to the credit applicant and the credit requested;
• retain the data for a period of three years;
• submit the data to the federal government on an annual basis; and
• make it available to the public upon request.
Section 1071 of the Dodd-Frank Act, under which the data collection and reporting requirement appears, imposes additional requirements, such as ensuring that the collected information does not contain any information that may identify a person connected with the business credit applicant.
Because dealers will require much additional direction from the government before they can be expected to carry out these duties, the NADA’s Regulatory Affairs Division met several times with staff from the Fed to request the dealer exemption.