The Consumer Financial Protection Bureau announced Friday its first-ever enforcement action for discriminatory lending practices in its action against indirect auto lender Ally.
The Bureau, in partnership with the Department of Justice, is ordering Ally to pay $98 million to address the company’s auto loan pricing structure, which the agencies allege has caused discrimination against more than 235,000 minority borrowers through “dealer markups,” or indirect lending channels.
“Too many consumers have had to pay more for their auto loans simply because of their race or other characteristics protected under the law,” said CFPB Director Richard Cordray in announcing the action. “Too often, these consumers do not know they are paying more or are simply unable to get recourse. Today’s action signals new attention to this serious problem.”
The action marks the first fair-lending action taken by the Bureau since its launch.
Under the order, Ally is required to pay $98 million toward resolution with the impacted borrowers and establish a new compliance framework. The company has also agreed to confer regularly with the CFPB in working to comply with fair lending law.
“We are committed to fair and equal access to credit for all consumers,” Cordray said. “In fact, it is one of our statutory responsibilities as a financial regulatory agency. Whether or not Ally consciously intended to discriminate makes no practical difference. In fact, we do not allege that Ally did so. Yet the outcome, and the harm to consumers, is the very same here.”
Written by Elizabeth Ecker