Mon, Jul 27, 2015
Washington, District Of Columbia
Consent Orders have been filed by the CFPB and DOJ concerning American Honda Finance Corporation discretionary auto loan pricing and compensation practices. A joint CFPB and DOJ investigation began in April 2013 of Honda's indirect auto lending compliance with the Equal Credit Opportunity Act, which prohibits creditors from discriminating against loan applicants in credit transactions on the basis of characteristics such as race and national origin. The investigation concluded that Honda's policies resulted in thousands of minority borrowers paying higher dealer markups of from $150 to over $250 more for auto loans. Under the CFPB order, Honda must substantially reduce or eliminate entirely dealer loan pricing discretion, pay $24 million in damages for consumer harm, and administer the distribution of those funds to victims. Under the DOJ Order, Honda will also pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit African-American, Hispanic and Asian/Pacific Islander populations. Read CFPB’s announcement.