WASHINGTON (12/23/13)--Allegations of discriminatory auto loan markup policies have resulted in an $80 million settlement between Ally Financial, the U.S. Dept. of Justice and the Consumer Financial Protection Bureau.
Under the terms of the settlement, Ally will pay $80 million in damages to consumers harmed by an alleged discriminatory markup policy that was used between April 2011 and Dec. 2013. The policy impacted more than 235,000 African-American, Hispanic, and Asian and Pacific Islander borrowers, the CFPB claimed.
According to the CFPB/DOJ order, Ally allowed auto dealers to mark up a consumer's interest rate above Ally's established buy rate. The financial firm then compensated dealers with funds obtained through the markups. "Ally did not monitor whether discrimination on a prohibited basis occurred through the charging of markups," the order said.
The CFPB/DOJ complaint said an analysis of Ally's lending practices found:
The order called on Ally to cease this markup practice, establish a compliance committee, and regularly report to the CFPB and DOJ on its compliance with non-discriminatory lending laws.
For a CFPB release on the order, use the resource link.