The Department of Justice on Feb. 19 announced that Texas Champion Bank has agreed to pay $700,000 to settle allegations that it discriminated against Hispanics who applied for loans with the bank.
Unsecured Loans, Higher Than Normal Rates
According to allegations filed in 2010 by the DOJ, Texas Champion branches charged Hispanic borrowers higher prices on their unsecured loans, in violation of the Equal Credit Opportunity Act (ECOA).
The bank, based in Alice, Texas, offers a range of small business and personal loans, from agricultural real estate loans to personal installment loans.
When you get an unsecured loan, you don’t have to put up any collateral, but you must generally pay a higher interest rate. Secured loans are backed by some type of property such as a car or home.
The settlement underlines the fact that you can get the loan but still have suffered discrimination. It’s not always as obvious as simply being turned down.
Settlement Highlights ECOA Enforcement
Under the settlement, which a court must still approve, Texas Champion will
pay $700,000 to approximately 2,000 people who suffered the discrimination
monitor loans for possible disparities based on national origin
train its employees on equal opportunity credit
revise its pricing policies to comply with ECOA
U.S. Attorney Kenneth Magidson
“The consent order . . . should serve as a reminder that discrimination in lending will not be tolerated,” said Kenneth Magidson, the U.S. Attorney for the Southern District of Texas, where the case was filed.
The DOJ got an extra dose of enforcement power over discrimination in lending when a Fair Lending Unit was established in the agency in 2010. Since then, it has handled 24 instances of discrimination under the ECOA and other laws, collecting $660 million on behalf of more than 300,000 victims, according to the DOJ.
For instance, last August the DOJ settled a huge case with GFI Mortgage Bankers Inc., which paid $3.5 million to resolve allegations that from 2005 to 2009, it priced mortgages in New York, New Jersey, and Florida higher for black and Hispanic borrowers.
If you believe you’ve been discriminated against by a bank because of your national origin or race, contact the DOJ’s Civil Rights Division.
Photo Credits: Jupiterimages/Comstock/Thinkstock.