Toyota Motor Credit agreed to pay a $21.9 million fine to settle complaints by federal agencies that it used discriminatory policies when setting interest rates for auto loans for minorities.
TMC, the automaker’s finance arm, also agreed to change its pricing and compensation system by reducing dealer discretion and accompanying financial incentives to mark up interest rates as part of the agreement it reached with the Consumer Financial Protection Bureau and U.S. Department of Justice. The CFPB, a new agency created by reforms of the financial system promoted by the Obama administration, said Toyota Motor Credit has agreed.
The fine is restitution to thousands of African-American and Asian and Pacific Islander borrowers who paid higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness, as a result of its past practices. (more…)