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Ally to repay $80 million to consumers it discriminated against

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When you shop for a car, auto lenders work with your auto dealer to offer you financing for your loan. Auto lenders consider the terms of your loan, your credit history, and other factors, to set a risk-based interest rate on your loan.  Many of them have policies that allow an auto dealer to “markup” that interest rate. Lenders use a part of that markup to compensate dealers for the valuable services they perform in arranging financing. Unfortunately, that creates incentives for dealers to charge higher interest rates and may be implemented in a way that results in illegal discrimination.

Ally Financial Inc. and Ally Bank have markup policies that have resulted in illegal discrimination against over 235,000 African-American, Hispanic, and Asian and Pacific Islander borrowers.

Today, along with the Department of Justice (DOJ), we’re ordering Ally Financial Inc. and Ally Bank to pay $80 million in damages to the consumers that were harmed by their discriminatory markup policy between April 2011 and December 2013.

Ally will pay a settlement administrator to contact consumers who are due to receive compensation. Along with the DOJ, we will identify victims and calculate their damages by looking at loan data.

Protections against discrimination

Remember, it’s illegal for a creditor to discriminate in any aspect of a credit transaction based on certain characteristics. If you believe a lender has discriminated against you for any reason, you can submit a complaint online or by calling (855) 411-2372.

You can learn more about the warning signs of discrimination and what you can do to protect yourself.

Protect yourself

In the meantime, watch out for scammers claiming that they will get you money. When large numbers of consumers get damages, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Please call us at (855) 411-CFPB to report such scams.

  • http://www.creditcardshoppe.com/ Credit Card Shoppe

    That’s great that you are looking out for your customers who have been affected by this act. Will they also be contacted individually? or how will they know that they have been affected?

  • Lny Dri

    This Act does have a low`some effect on the Unified Business Identificator. It effect`s the field of requirement`s trust and it also effect`s the spender`s trust,, low`some`l`y.

  • GH

    The CFPB is going too far with this sort of thing. HOW is a lender who does not see the borrower and does not get information on race, ethnicity or other information supposed to know if their rates are being set disciminating against anyone. Using a “proxy”? I wonder if the CFPB will look at how much these borrowers were charged for the car they purchased. Did minorities pay more for comparable cars than others? If the dealerships are discriminating on the loans, then they MUST be disciriminating in the pricing of the car too! Everyone in this industry KNOWS that is happening but since the CFPB was explicitiy prohibited by congress from regulating the auto industry, I guess THAT discrimination gets a pass. God bless America and the congress”people” sold to the highest bidder!
    How will this money be sent back to consumers? Will they use a proxy as well or actually deliver $30 checks to make sure someone is a minority? I think since ALLY was basically saved by the government, I’d like a check.

  • MsCatsMeow

    The actual discrimination was done by the auto dealers who had the borrower in front of them, who failed to fill in the correct info, and who did the actual discriminating. What punishment will the dealers and their employees who committed the discrimination receive? I would think that if the Bureau gave such a huge penalty for the bank who bought the loans the the people / businesses who actually committed the crime should be hit even harder.

  • SickOfOverpaidGovernment

    I’d like to echo what MsCatsMeow said, why is the bank being punished and not the dealerships who did the discriminating? Is there tangible evidence that the bank somehow encouraged this practice or is the CFPB looking for someone to flog in a public square so they can look like they are doing their job? (I beleive the latter, because if there were evidence of overt discriminatory practices at Ally, I’m sure they would present it.) So, CFPB, good game. Well played. You get kudos from the ignorant American public, but not me; at least not yet.

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