FARMINGTON HILLS, Mich. — While recent bulletins from
federal regulators have been associated with F&I elements such as dealer
participation, RouteOne reminded principals and managers about the potential consequences
for not complying with rules associated with adverse action notices and risk-based
pricing.

RouteOne digital marketing manager Francis Gojcaj shared a
question often asked by dealers, stating, "If I didn't know the laws, can I
still be held liable?"

Joseph Karam, staff attorney at RouteOne immediately
replied, "Unfortunately, ignorance of the law is not a defense."

During a recent webinar hosted by RouteOne, Karan
highlighted some of the tangible and intangible costs to a dealership for
failing to comply with federal regulations associated with adverse action
notices and risk-based pricing, which come under the rules implemented by the
Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA).

Karam noted that dealers can face penalties associated with
individual claims, which can run up to as much as $10,000. Or stores can face
class-action penalties totaling up to $500,000 or 1 percent of the dealership's
total net worth.

The RouteOne staff attorney then touched on the intangible
costs dealers can incur for non-compliance, which can include reputation damage
because of the store's involvement in an audit or lawsuit becoming public knowledge
in the market.

"Most dealers today are familiar with adverse action. And as
risk-based pricing has become a newer topic over the past couple of years,
dealers have become more familiar with that topic, too. But there are still a
significant amount of dealers who are not practicing adverse action and
risk-based pricing compliance within their dealership," Gojcaj said.

More details about what RouteOne shared about adverse action
notices and risk-based pricing can be found in the recording of its session,
available here. Both Gojcaj and Karam reminded dealers that they should consult
their legal representative to craft a compliance plan specific to their store
and market.

RouteOne is hosting another free webinar on Wednesday in
which the company plans to highlight what its solutions can help dealers remain
compliant. Dealers can register for the session by going to www.routeone.com/freewebinar.

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