CALIFORNIA
Toyota agreed to resolve allegations by the federal government that the car company engaged in a “pattern and practice” of discriminating against blacks and Asian/Pacific Islanders in auto lending, officials announced today.
Toyota, based in Torrance, California, is the nation’s largest captive auto lender, and the fifth largest auto lender overall.
The settlement resolves claims by the Justice Department and the Consumer Financial Protection Bureau charged thousands of African-American and Asian/Pacific Islander borrowers higher interest rates than white borrowers.
The federal agencies claim that Toyota charged some borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.
The United States’ complaint alleges that the average black victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Asian/Pacific Islander victim was obligated to pay over $100 more during the term of the loan because of discrimination.
“No consumer should be forced to pay more money for a loan because of their race or national origin,” said U.S. Attorney Eileen M. Decker of California. “This settlement resolves our claims by providing compensation for affected consumers and seeking to ensure that future loans funded by Toyota reflect equal terms.”
In addition to the payments of at least $19.9 million to its victim borrowers, the settlement also requires Toyota to improve its monitoring and compliance systems.
The settlement allows Toyota to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results.
The department commends Toyota for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom federal agencies identify as victims of Toyota’s discrimination.