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The method CFPB uses to cite possible discrimination of minorities in auto lending is "prone to significant error," said a report released last week by House Financial Services Committee Republicans.

The report, "Unsafe at Any Bureaucracy: CFPB Junk Science and Indirect Auto Lending," contains internal CFPB documents the committee received while investigating the bureau's "disparate impact" method used on vehicle finance companies to make sure they avoid discrimination.

"[T]he Bureau's [Equal Credit Opportunity Act] enforcement actions have been misguided and deceptive," the report states. "The Bureau ignores, for instance, the lack of congressional intent to provide for disparate impact liability under ECOA, just as it ignores the fact that indirect auto finance companies are not always subject to ECOA and have a strong business justification defense."

The Wall Street Journal in September reported that CFPB's efforts to police the way car loans are priced to avoid discrimination against minority buyers is causing some automakers to overhaul their loan pricing, a move that could increase consumers' overall loan costs.

CFPB is pressing lenders to lower the caps they set on dealer markups or to switch to flat fees – a percentage of the loan amount or a set dollar fee. CFPB has encouraged lenders to step up their oversight of dealers to make sure they are in compliance and discriminatory pricing isn't being practiced.

CFPB issued a bulletin in 2013 that said indirect lenders, including credit unions, would be held liable for Equal Credit Opportunity Act violations of auto dealers, including violations arising from disparate impact. NAFCU steadfastly supports the enforcement of fair lending laws but it has raised concerns about actions that rely solely on the use of the disparate-impact theory of discrimination.