Why Fair Lending Compliance Matters to Your Dealership
How regulatory risk actually lands on dealerships, and how SelectFI is built to reduce it.
Yes — this isn't a hypothetical risk. The FTC has pursued more than 50 fair lending cases against dealerships and worked with state regulators on national sweeps resulting in 181 actions. Over 100,000 complaints have been filed against dealerships in the last three years alone. Regulators have also shown they're willing to name individual owners and managers personally in lawsuits, not just the dealership as a business.
Q: What does a fair lending policy actually require from us?NADA offers a model fair lending policy most dealers can adopt fairly easily: choose a standard margin on financing, and document why a customer's financing differs from that standard whenever it does. The recordkeeping is the part that trips dealerships up in practice.
Q: How does SelectFI help with that recordkeeping?Lender Selector monitors this activity automatically and keeps those records for five years, which is the retention window compliance requires. Every financing estimate is generated using only the customer's credit profile and the vehicle's collateral value — not assumptions about the customer — so decisions are consistently data-driven rather than left to individual judgment call.
Q: Does SelectFI replace our own compliance responsibility?No — your dealership is still responsible for complying with federal and state law. SelectFI's role is to give you the tools and documentation that make meeting that responsibility easier and more consistent, including automated Risk-Based Pricing Notices and Adverse Action letters required under the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act, and the Equal Credit Opportunity Act.
Q: What's the actual business risk of getting this wrong?Beyond fines, dealerships have paid multi-million-dollar settlements in recent FTC actions, on top of the reputational damage from public lawsuits. The financial risk falls most heavily on ownership, which is exactly why a consistent, documented, data-driven process matters — it's the difference between a defensible decision and a guess that looks arbitrary after the fact.
Quick Recap- Fair lending enforcement is active — 50+ FTC cases, 181 actions, 100,000+ complaints in 3 years
- A standard margin policy with documented exceptions is the baseline most dealers need
- SelectFI automates that documentation and retains records for 5 years
- Decisions are based only on credit and vehicle value — not assumptions about the customer
- Your dealership is still responsible for compliance; SelectFI is a tool that supports it
Questions? Reach out to your SelectFI account team and we'll be happy to help.