DOJ Announces Settlement Of Auto Lending Discrimination Suit

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On September 6, the DOJ announced the resolution of a long-running lawsuit against an auto dealer and a bank that financed many of the dealer’s loans, in which the government alleged that the dealer and the bank violated ECOA by charging non-Asian customers higher interest rate markups than other customers over a three-year period. The bank entered into a partial consent decree in 2009 and agreed to pay a total of $410,000 to non-Asian borrowers to resolve the allegations against it. The dealer chose to litigate and obtained a dismissal in trial court; that order was reversed last year by the Ninth Circuit. The dealer agreed to a consent decree  with the DOJ on September 4 that fully resolved all claims against it. The dealer, which is now out of business, specifically denied the government’s allegations and the decree made clear the outcome was a “compromise of disputed allegations.” Under the terms of the decree, the dealer will pay up to a total of $125,000 to non-Asian customers who were charged higher dealer interest rate markups. If the dealer or its principal shareholder re-enter the business of automobile lending within the two year duration of the consent decree, it will be required to implement clear guidelines for setting dealer markup and pricing, in compliance with ECOA, and establish fair lending training for its employees and officers.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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