The American Bar Association proposed Resolution 104B this past July to urge policymakers to adopt specific regulations governing auto dealerships and vehicle financing.  While the Resolution failed to win approval, it is not necessarily dead.

As proposed, Resolution 10B would do five things:

  1. Urge federal, state, local, territorial, and tribal governments to “adopt and enforce stronger fair lending laws targeted to discrimination in the vehicle sales market”;
  2. Urge Congress to amend the Equal Credit Opportunity Act to require the collection of the applicant’s race and national origin in vehicle financing transactions;
  3. Urge Congress and all state, local, territorial, and tribal legislative bodies and government agencies to adopt laws and policies that “require a flat percentage fee for dealer compensation” and “disclosure of dealer compensation” in vehicle financing transactions;
  4. Urge federal, state, local, territorial, and tribal governments to adopt legislation “requiring the separate posting of pricing of add-on products by dealers on each vehicle before a consumer negotiates to purchase a vehicle”; and
  5. Encourage state, local, territorial, and tribal bar associations to “offer programming to educate lawyers and consumers about abusive, deceptive, or fraudulent vehicle sales transaction financing and sales practices.”The Resolution was withdrawn before a planned vote by the ABA membership at an annual meeting on August 6 in the face of significant opposition.  Many in the auto finance industry believe that this Resolution would have encouraged policymakers to adopt unwarranted and redundant restrictions on the industry.Although the Resolution is off the table for now, it may reemerge in some form.  When a resolution is “withdrawn” from consideration (this can simply mean the proposal was procedurally flawed in a curable way), the proponents of the Resolution are free to submit it again.  As such, automobile dealers and lenders should remain watchful of proposals for additional regulation.