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$10 million Napleton discrimination case may preview more scrutiny on F&I product margins

This game plan was modeled after terms outlined in 2007 Department of Justice consent orders with dealerships, and the Napleton settlement offers the retailer the option of adopting an interest rate policy similar to the NADA template.

In 2019, NADA, NAMAD and AIADA teamed up again to issue the Model Dealership Voluntary Protection Products Policy, which recommended standardizing F&I product pricing.

Dealerships adopting this policy would charge an identical product margin to every customer and reduce it only when confronted with one of five predefined business reasons.

One of those is a situation in which a dealership is confronted with a competitor’s offer. NADA, NAMAD and AIADA recommend retailers set a consistent policy of meeting the offer or beating it by a fixed amount rather than mixing and matching approaches. Any such downward deviation would be documented.

“It’s almost necessary” to adopt both NADA policies, Henrick said.

Ryan Daly, East Central Region district manager at compliance firm KPA, said his company trains dealerships to use product pricing consistency, and he had a similar policy when he worked as a finance manager.

“I’ve always told every dealership, ‘I am not interested in how much you’re starting it at. I’m interested to make sure that you’re starting everybody at that,’ ” Daly said.

Unlike the 2014 dealer interest rate initiative, the NADA F&I products policy isn’t based on a federal consent decree. The Napleton settlement also doesn’t spell out a product pricing mandate with the kind of detail seen for interest rate margins.

But it does require the retailer to “maintain written guidelines specifying the reasons for assessing or not assessing any fee or other charge, each of which must be objective and none of which can be discriminatory.”

Daly said he didn’t think the Napleton case would be the last industry-related action from the FTC this year.

“They have thousands of complaints that they haven’t acted on yet,” he said.


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