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Federal Register / Vol. 86, No. 178 / Friday, September 17, 2021 / Rules and Regulations
broader group of consumer report users.
While the Dodd-Frank Act did not change the Commissions enforcement authority for the Risk-Based Pricing Rule, it did narrow the Commissions rulemaking authority with respect to the Rule. It now covers only users of consumer reports that are motor vehicle dealers.11 The amendments in the DoddFrank Act necessitate technical revisions to the Risk-Based Pricing Rule to ensure the regulation is consistent with the text of the amended FCRA.
Accordingly, the Final Rule amends the Risk-Based Pricing Rule to properly reflect the Rules scope.
The Final Rule amends section 640.1a to narrow the description of the scope of the Risk-Based Pricing Rule to motor vehicle dealers excluded from Consumer Financial Protection Bureau jurisdiction as described in 12 U.S.C.
5519. It does so by replacing the broad term person with motor vehicle dealer, as defined in amended section 640.2. The term motor vehicle dealer replaces person throughout the Rule, whenever person is used to describe the entity covered by the Rule. In provisions where person does not refer to a motor vehicle dealer covered by the Rule, such as sections 640.4c2
and 640.6b2, the term person is retained.12
The Final Rule removes section 640.1b, which describes the process by which the Commission worked with the Federal Reserve Board to initially issue the Risk-Based Pricing Rule and states the Commissions and the Boards rules are substantively identical. The Final Rule removes this section because the Dodd-Frank Act transferred the Boards rulemaking authority for the Risk-Based Pricing Rule to the CFPB.
The Final Rule amends section 640.2
to add a definition of motor vehicle dealer that defines motor vehicle dealers as those entities excluded from the CFPBs jurisdiction under the DoddFrank Act.13 The amendment also updates the definition of open-end credit by replacing the statutory reference to 15 U.S.C. 1602i with a citation to 15 U.S.C. 1602j. It also changes references to the Federal Reserve Boards regulation to the CFPBs regulation.
In addition, the Final Rule updates references to the risk-based pricing notices in sections 640.4a1viii, 640.4a2viii, 640.5d1iiI, 640.5e1iiL, and 640.5fiiiI from 11 15

U.S.C. 1681se1; 12 U.S.C. 5519.
consistency, the proposed amendments also change any use of the term auto dealer to motor vehicle dealer. See, e.g., 16 CFR
640.4c2ii.
13 12 U.S.C. 5519.
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the Boards website to the CFPBs website to reflect the CFPBs authority under the Dodd-Frank Act.
B. Examples The Rule contains examples that apply to entities no longer within the scope of the Rule due to the Dodd-Frank Act. Retaining these examples might lead to confusion about the actual scope of the Risk-Based Pricing Rule.
Accordingly, in addition to changing the term person to motor vehicle dealers in some examples as discussed above, the Final Rule modifies some of the examples to provide clearer guidance to financial institutions that are covered motor vehicle dealers. For example, the Final Rule removes references to utility companies and charge cards section 640.2n3 and to student loans, secured and unsecured credit cards, and fixed and variable rate mortgages section 640.3b15. The Final Rule also replaces references to credit card issuers with motor vehicle dealers sections 640.4d2;
640.5a2; 640.5c3. These modifications to the cited examples are not intended to modify the substantive requirements of the Rule, as the examples simply illustrate the Rules application in a particular context.14
C. Comment The sole commenter on the Rule, the East Bay Community Law Center East Bay, stated the Rule is an important tool in ensuring a more accurate credit reporting system. East Bay pointed to research that indicates inaccuracies are common in consumer reports,15 and cited statements from consumers about the negative impact such inaccuracies can have on their lives.16 East Bay also presented evidence such inaccuracies can have a greater impact on lowerincome and minority consumers.17 East 14 The Commission recognizes there are substantive provisions of the Risk-Based Pricing Rule that typically would not apply to motor vehicle dealers. For example, motor vehicle dealers rarely issue credit cards, even though that term is defined broadly as any card, plate, coupon book or other credit device existing for the purpose of obtaining money, property, labor, or services on credit. The Commission has chosen, however, not to remove these provisions from the Rule for two reasons. First, the current Rule is substantively identical to the CFPBs risk-based pricing rule. The Commission believes it is beneficial to maintain this conformity and has opted to make no substantive changes to the rule. Second, to the extent motor vehicle dealers do not engage in particular conduct, e.g. issuing credit cards, then those requirements would simply not apply.
15 See, e.g., Mistakes Do Happen: A Look at Errors in Consumer Credit Reports, Natl Assn of State PIRGs, 4 2004, available at https uspirg.org/sites/
pirg/files/reports/Mistakes_Do_Happen_2004_
USPIRG.pdf.
16 East Bay Law Center Comment 3 at 23.
17 Id. at 67.

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Bay made two suggestions for additional amendments to the Rule that it argued would help address these problems.18
First, East Bay suggested the Commission modify the Rule to disincentivize or prevent credit institutions from using risk-based pricing when offering loans to individuals with poor credit by requiring credit institutions to raise the credit cut off point, thereby preventing consumers with poor credit from gaining access to potentially predatory contracts. 19 The Commission shares the commenters concern about predatory financial practices aimed at people with lower income, and has brought numerous cases to challenge such practices.20
Such enforcement is ever more important. However, the Risk-Based Pricing Rules primary purpose is to inform consumers when they have received less favorable terms for credit based on their consumer report or credit score.21 There is no evidence that, in enacting Section 311 of the FACT Act, Congress intended to discourage or prevent companies from extending credit to consumers with poor e.g., below a particular prescribed threshold or no credit histories, which would be the likely result of any regulation that prevented the use of risk-based pricing for those consumers.22 Accordingly, the Commission declines to adopt this suggestion.
East Bay also urged the Commission to amend the Rule to require that riskbased pricing notices include detailed guidance to consumers on what specific changes they should make to improve their credit scores and qualify for a better loan. 23 The Commission agrees that information for consumers about improving their credit is valuable, and provides guidance in its consumer education materials, as does the CFPB.24
When the consumers credit score is used in determining pricing, the Rule already requires companies to identify key factors that affected the consumers 18 Id.

at 89.
at 8.
20 See, e.g., FTC v. Lead Express, Inc., Case No.
2:20cv00840JADNJK D. Nev. May 22, 2020;
FTC v. AMG Services, Inc., Case No. 212cv00536
D. Nev. April 2, 2012; FTC v. First Alliance Mortgage Company, Case No. SACV 00964 C.D.
Cal. March 21, 2002.
21 See 15 U.S.C. 1681mh1.
22 Moreover, as the Rule covers only users of consumer reports who are motor vehicle dealers, such a credit cut-off would not apply to the far larger group of entities covered by the CFPBs corresponding rule.
23 East Bay Community Law Center Comment 3, at 9.
24 See, e.g., www.consumer.ftc.gov/articles/
understanding-your-credit;
www.consumerfinance.gov/learnmore.
19 Id.

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