The Equal Credit Opportunity Act is a critical law that impacts all creditors – including auto dealers. The ECOA prohibits lenders and financial institutions from discriminating when making loans based on any legally protected criteria, including race, religion, age, sex, and more. Failure to comply with the ECOA can lead to severe penalties, including fines of up to $500,000!

Today, almost all auto dealers act as creditors. If your dealership performs standard functions like checking credit and extending financing, your business is legally a lender, and must comply with the ECOA. You and your team must understand that it is always illegal to make a lending decision based on criteria protected by the ECOA.

The ECOA requires creditors to disclose certain facts to consumers, and also prohibits lenders from asking some types of questions:

As an automotive executive, you must be aggressive in ensuring that your team understands the critical importance of compliance with the Equal Credit Opportunity Act. Of course, this is especially important for your financing team to understand. Though we’d all like to imagine our team is free from bias, even the appearance of illegal discrimination can lead to ECOA violations.

If you have not specifically implemented an ECOA compliance strategy, your dealership is at risk.


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