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 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.
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.