Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
Ally Financial Ordered to Repay $80M
WASHINGTON (12/23/13)--Allegations of discriminatory auto loan markup policies have resulted in an $80 million settlement between Ally Financial, the U.S. Dept. of Justice and the Consumer Financial Protection Bureau.

Under the terms of the settlement, Ally will pay $80 million in damages to consumers harmed by an alleged discriminatory markup policy that was used between April 2011 and Dec. 2013. The policy impacted more than 235,000 African-American, Hispanic, and Asian and Pacific Islander borrowers, the CFPB claimed.

According to the CFPB/DOJ order, Ally allowed auto dealers to mark up a consumer's interest rate above Ally's established buy rate. The financial firm then compensated dealers with funds obtained through the markups. "Ally did not monitor whether discrimination on a prohibited basis occurred through the charging of markups," the order said.

The CFPB/DOJ complaint said an analysis of Ally's lending practices found:
  • African-American borrowers were charged 29 basis points more than similarly-situated non-Hispanic whites, resulting in them paying more than $300 more in interest over the lifetime of their loan contracts;
  • Hispanic borrowers were charged 20 basis points more than similarly-situated non-Hispanic whites, resulting in them paying more than $200 more in interest over the lifetime of their loan contracts; and
  • Asian/Pacific Islander borrowers were charged 20 basis points more than similarly-situated non-Hispanic whites, resulting in them paying more than $200 more in interest over the lifetime of their loan contracts.
The order called on Ally to cease this markup practice, establish a compliance committee, and regularly report to the CFPB and DOJ on its compliance with non-discriminatory lending laws.

For a CFPB release on the order, use the resource link.
Other Resources

CFPB Release
RSS print
News Now LiveWire
New offices mean moving sale at @TheKCUA https://t.co/xaof5SJkmE
20 minutes ago
Existing-home sales slump in August as cash purchases decline @REALTORS
1 hours ago
How #creditunions use FHLBs in their operations, Part 3 #NewsNow #System http://t.co/DXgRqXiRAn
3 hours ago
Retirement reality fairs: Looking at post-work futures today. #NewsNow http://t.co/IcM4uK3IOl
3 hours ago
#HomeDepotBreach: What it means for consumers with 56 million compromised cards See #NewsNow http://t.co/9MJ9JTnHYC
4 hours ago