CFPB and the DOJ order Ally Financial Inc. to pay $80 million to 235,000 minority borrowers for discriminatory auto loan pricing

Today, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) ordered the federal government's largest auto loan discrimination settlement in history when it ordered Michigan-based Ally Financial Inc. and Ally Bank to pay $80 million in damages to 235,000 harmed African American, Hispanic, and Asian and Pacific Islander borrowers, as well as $18 million in penalties. A CFPB investigation that began in September 2012 revealed that as an indirect auto lender, Ally failed to implement an effective compliance program to monitor its loan portfolio for discrimination (See our March 22, 2013, blog post for more information). The investigation found that Ally violated both CFPB regulations and the Equal Credit Opportunity Act (ECOA) by allowing auto dealers to charge a higher interest rate for minority borrowers' auto loans than for similarly situated non-Hispanic white borrowers. In addition to the aforementioned $80 million in damages and $18 million in penalties, under the order Ally must pay to hire a settlement administrator to distribute the funds to victims and and it must either monitor dealer markups to prevent future discrimination or eliminate dealer markups altogether. For more, including the full text of the consent order, read the full news release.

Consumer Financial Protection Bureau