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Honda Finance Division Makes $25 Million Settlement For Discriminatory Lending

Honda Finance Division Makes $25 Million Settlement For Discriminatory Lending

By North Dallas Gazette, Writer Nicole James ScottAfter a probe by the Department of Justice American Honda Finance will pay $24 million to African-American, Hispanic and Asian and Pacific Islanders who were overcharged higher interest rates on car loans. An additional $1 million will be paid to fund a consumer financial program.{{more}}According to the DOJ and Consumer Financial Protection Bureau minority borrowers with similar credentials as White applicants were charged higher rates dating back to at least 2011. On an average African-Americans paid $250 more, Hispanics $200 more and Asians $150 more. Honda Motors denies any wrong doing and firmly stands by its lending practices, claiming their compliance to the $25 million settlement is merely to avoid any lengthy litigation. They went on to add their cooperation with the DOJ is an indication of their commitment to be a part of the solution as opposed to any acknowledgement of guilt.We spoke with Honda’s Manager of Corporate Affairs and Communications, Marcos Frommer to get a better understanding of Honda’s position on the allegations of discrimination and the settlement. We asked Frommer the following questions:•Does Honda Motors agree with the conclusion of the Justice Department’s findings? If yes, why? If no, why?•Does Honda Motors feel that $25 million was a fair amount?•Have any employees been reprimanded as a result of the Justice Department’s findings?•Are you concerned this settlement will impact Honda Motors’ sales among the the 3 groups that were found to have been victims of lending discrimination?•How does Honda Motors intend to go about compensating those who were injured by its discriminatory lending practices?•Honda Motors released the following statement: “We firmly believe that our lending practices have been fair and transparent.” If this is indeed correct, how do you account for the Justice Department’s findings that on average African-Americans paid $250 more than White borrowers, Hispanics $200 more and Asians and Pacific Islanders $150 more?•Does Honda Motors conduct its own internal investigations to assess whether or not its agents are engaging in discriminatory lending?Unfortunately, he declined to answer. He instead diverted to Honda’s generic official statement. “Honda affirmatively asserts that it has treated all of its customers without regard to race or national origin, and that its business practices have promoted and achieved fairness across all customer groups. Furthermore, Honda has not been informed that the United States contends Honda or any of its employees engaged in any intentional discrimination or disparate treatment of minorities.”Honda is not the first auto company to have been found guilty of discriminatory lending. In 2013, Ally Financial coughed up $98 million in a settlement, the highest penalty paid thus far for charging 235,000 minority borrowers more than Whites. Likewise they denied any wrong doing and stand by their lending practices.According to a study conducted in August 2014 by the Federal Reserve Bank of New York Research and Statistics Group auto loans comprise the third largest source of household debt. In fact, at the end of 2014 Americans had $886 billion in outstanding auto loans. That’s a 23% increase from the previous two years.For African-Americans who are typically more likely to incur debt these figures are even more alarming. But more astonishing is despite the fact 10% more African-Americans than White Americans reported negotiating their interest rate their efforts apparently had no influence on the outcome.It appears be it discriminatory lending or other predatory financial practices African-Americans regardless of their economic gains continue to encounter and fall victim to systemic financial hurdles.Consequently, one in four African-Americans battle with anxiety or depression due to debt.

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