Torrance, California - Toyota’s US credit division will pay up to $21.9 million (R348m) to minorities who paid higher interest rates than whites for their car loans.
This is comes as part of a settlement with US federal regulators, and stems from a joint investigation by the Department of Justice and the Consumer Financial Protection Bureau (CFPB) that began in 2013.
“The investigation did not find that Toyota Motor Credit intentionally discriminated against its customers, but rather that its discretionary pricing and compensation policies resulted in discriminatory outcomes,” the CFPB said in a statement.
On average, African Americans paid $200 (R3180) more for their vehicle loans than whites, while Asian and Pacific Islanders were charged over $100 (R1590) more on average, it said, adding that thousands of people were affected.
FREEDOM TO DISCRIMINATE
Indirect lenders such as Toyota Motor Credit permit car dealers to increase interest rates, “giving them the discretion to charge consumers different rates regardless of consumer creditworthiness,” according to the CFPB.
It said that Toyota Motor Credit allowed dealers to mark up interest rates by as much as 2.5 percent.
Toyota Motor Credit said it does not tolerate discrimination of any kind and stressed it had no access to information regarding the race of customers.
“As an indirect lender, TMCC has no visibility into the race or ethnicity of its customers or credit applicants, and these factors have no bearing on the company's credit or pricing decisions,” it said in a separate statement.
As part of the settlement, it agreed to cap dealer discretion to mark up interest rates.
AFP