{"id":13613,"date":"2015-07-14T11:55:39","date_gmt":"2015-07-14T18:55:39","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=13613"},"modified":"2015-07-14T11:58:21","modified_gmt":"2015-07-14T18:58:21","slug":"honda-resolves-allegations-of-car-loan-discrimination-against-minorities","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=13613","title":{"rendered":"Honda Resolves Allegations of Car Loan Discrimination Against Minorities"},"content":{"rendered":"

WASHINGTON<\/strong><\/p>\n

\n

\"consumer<\/a>Honda agreed to settle allegations that the car manufacturer’s Finance Corporation discriminated against African-American, Hispanic and Asian\/Pacific Islander by charging higher interest on auto loans, officials said today.<\/p>\n

Honda agreed to change the way it prices its loans by limiting dealer markup to 1.25 percentage points for loans of 60 months or less, and 1 percent point for loans more than 60 months, the U.S. Department of Justice announced.<\/p>\n

The settlement also provides $24 million in compensation for alleged victims of past discrimination by the nation\u2019s ninth largest auto lender.<\/p>\n

\u201cWe commend Honda for its leadership in agreeing to impose lower caps on discretionary markups and for its commitment to treating all of its customers fairly without regard to race or national origin,\u201d said Vanita Gupta, head of the Civil Rights Division.<\/strong> \u201cWe recognize that dealerships perform a valuable service in connecting customers with lenders and that they should be fairly compensated for that service. We believe that Honda\u2019s new compensation system balances fair compensation for dealers and fair lending for consumers. We hope that Honda\u2019s leadership will spur the rest of the industry to constrain dealer markup to address discriminatory pricing.\u201d<\/p><\/blockquote>\n

The coordinated investigations by the department and the Consumer Financial Protection Bureau<\/strong> showed that Honda\u2019s qualified African-American, Hispanic and Asian\/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.<\/p>\n

Dealers receive greater payments from Honda on loans that include a higher interest rate markup.<\/p>\n

The department and the Protection Bureau anticipate that Honda\u2019s new caps on discretionary markups will substantially reduce or eliminate these disparities, officials said.<\/p>\n

Honda is known as an \u201cindirect\u201d auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Honda.<\/p>\n

Honda\u2019s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan\u2019s interest rate from the price Honda initially sets based on the borrower\u2019s objective credit-related factors.<\/p>\n

The settlement resolves claims by the department and the Protection Bureau that Honda discriminated by charging thousands of minorities.<\/p>\n

The agencies claim that Honda charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers\u2019 creditworthiness or other objective criteria related to borrower risk.<\/p>\n

The United States\u2019 complaint alleges that the average African-American victim was obligated to pay over $250 more during the term of the loan because of discrimination, the average Hispanic 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 $150 more during the term of the loan because of discrimination.<\/p>\n

\u201cThe CFPB is committed to creating a fair marketplace for all consumers, and other auto lenders should take note of today\u2019s action,\u201d said Director Richard Cordray of the Consumer Financial Protection Bureau.<\/strong>\u00a0 \u201cHonda\u2019s proactive decision to move to a new pricing and compensation system demonstrates industry leadership and represents a significant step towards protecting consumers from discrimination.\u201d<\/p>\n

In addition to the $24 million in payments for its past conduct, under the Justice Department consent order, Honda will also pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit of minorities.<\/p>\n

\u201cHonda\u2019s financing practices that allowed dealerships to mark up individual loans resulted in illegal discrimination, with minority car buyers paying more for their loans than non-minority buyers with similar credit histories,\u201d said U.S. Attorney Eileen M. Decker of the Central District of California.<\/strong>\u00a0 \u201cThis settlement provides for Honda to contribute $24 million to a settlement fund to provide redress for thousands of minority borrowers, not only in this district, where Honda\u2019s United States operations are based, but throughout the country.\u00a0 It sends the clear message that discrimination of any kind is intolerable, and that other auto companies should follow Honda\u2019s lead in taking steps to ensure that their sale and financing practices do not result in discrimination.\u201d<\/p>\n

In addition to the $24 million in payments for its past conduct, under the Justice Department consent order, Honda will also pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit minorities.<\/p>\n

The settlement also requires Honda to improve its monitoring and compliance systems.<\/p>\n

Also it \u00a0allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the Protection Bureau on the results of its efforts as well as discuss potential ways to improve results, officials said.<\/p>\n

The department commends Honda for working cooperatively to reach an appropriate resolution of this case, according to authorities.<\/p>\n

In addition, the settlement sets up an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the Protection Bureau identify as victims of Honda\u2019s discrimination.<\/p>\n

The department and the Protection Bureau will make a public announcement and post information on their websites once more details about the compensation process become available.\u00a0 Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the Protection Bureau at this time.<\/p>\n

The department\u2019s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division.<\/p>\n

Since the Fair Lending Unit was established in February 2010, it has filed or resolved 40 lending matters under the Fair Housing Act, ECOA and the Service Members Civil Relief Act.<\/p>\n

The settlements in these matters provide for a total of at least $1.2 billion in monetary relief for impacted communities.<\/p>\n

The Attorney General\u2019s annual reports to Congress subject to ECOA highlight the department\u2019s accomplishments in fair lending and are available atwww.justice.gov\/crt\/publications.<\/p>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON Honda agreed to settle allegations that the car manufacturer’s Finance Corporation discriminated against African-American, Hispanic and Asian\/Pacific Islander by charging higher interest on auto loans, officials said today. Honda agreed to…<\/p>\n","protected":false},"author":1,"featured_media":13615,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3],"tags":[691,1467],"class_list":["post-13613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-main-slider","category-u-s-department-of-justice","tag-discrimination","tag-honda"],"yoast_head":"\nHonda Settles Allegations of Car Lending Discrimination<\/title>\n<meta name=\"description\" content=\"Honda agreed to settle allegations that it discriminated against minorities by charging them higher interest rates.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cjnotebook.com\/?p=13613\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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