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
(CF) 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 CF 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.
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 CF.
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, TM CC 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.
