As part of an order after investigation of discriminatory auto loans by The Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ), American Honda Finance Corp. will pay $24 million in restitution to affected borrowers. The parties agreed on a resolution that will also put new measures in place to address discretionary auto loan pricing and compensation practices.
“The CFPB is committed to creating a fair marketplace for all consumers, and other auto lenders should take note of [this] action,” said CFPB Director Richard Cordray, according to reports. “Honda’s proactive decision to move to a new pricing and compensation system demonstrates industry leadership and represents a significant step towards protecting consumers from discrimination.”
“We commend Honda for its leadership in agreeing to impose lower caps on discretionary markups and for its commitment to treating all of its customers fairly without regard to race or national origin,” said the head of DOJ’s Civil Rights Division, Principal Deputy Assistant Attorney General, Vanita Gupta. “We recognize that dealerships perform a valuable service in connecting customers with lenders and that they should be fairly compensated for that service. We believe that Honda’s new compensation system balances fair compensation for dealers and fair lending for consumers. We hope that Honda’s leadership will spur the rest of the industry to constrain dealer markup to address discriminatory pricing.”