by Michael Imhotep, TheMichaelImhotepShow.com
December 5th, 2015, 3:25pm EST
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced on September 28th, 2015 an $18 million settlement to resolve allegations that Fifth Third Bank (Fifth Third) engaged in a pattern or practice of discrimination against African-American and Hispanic borrowers in its indirect auto lending business. This resulted in thousands of African American and Hispanic customers paying over $200 more on auto loans over the course of the loan than White customers.
The settlement, which is subject to court approval, includes compensation for African-American and Hispanic borrowers who were overcharged, and requires changes to the way that Fifth Third prices automobile loans. This reminds me of Dr. Martin Luther King Jr. talking about Redistributing The Pain to Corporate America and taking our money out of White banks downtown and putting out money in African American owned banks.
An Ohio-based bank has come under fire for charging Black and Latino customers more interest on auto loans, a joint investigation by the U.S. Department of Justice and the Consumer Financial Protection Bureau has found.
Fifth Third Bank, which has 1,300 banking locations in 12 states, has agreed to pay an $18 million settlement related to indirect auto loans made through dealerships. The bank allowed dealers to raise interest rates as they saw fit, which resulted in them charging customers of color $200 more over the course of auto loans than white customers. Some dealers charged customers as much as 2.5 percent more than the bank’s actual rate, or buy rate, for such loans.
The discrepancy was NOT related to how credit worthy the Black and Latino customers were, and dealers were reportedly allowed to pocket the additional interest as compensation. By charging these customers higher interest, the dealers received more money for loans from Fifth Third Bank.
The settlement resolves claims by the department and the CFPB that Fifth Third discriminated by charging thousands of African-American and Hispanic borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Fifth Third charged borrowers higher interest rates because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Hispanic victim was also obligated to pay over $200 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Fifth Third’s settlement with the Department of Justice, which is subject to court approval, was filed today in the U.S. District Court for the Southern District of Ohio in conjunction with the Department of Justice’s complaint. Fifth Third resolved the CFPB’s claims by entering into a public administrative settlement.
Among other fines that Fifth Third Bank has to payout in addition to the $18 million is $3 million related to unlawful practices in the promotion of add-on credit card services. This marks the eleventh time the CFPB has issued such fines. About 24,500 customers were affected by these promotions, which allegedly misinformed customers about the costs, benefits, terms and conditions of services, such as the ability to cancel credit card payments during times of financial hardship. Lastly, Fifth Third Bank will pay $1 million in fines for lending violations. AtlantaBlackStar.com reported
Michael Imhotep is a talk show host, researcher, lecturer, writer and founder of The African History Network. He is the host of The Michael Imhotep Show on The Empowerment Radio Network and can be heard Monday-Friday, 10pm-12midnight EST on www.TuneIn.com or the TuneIn Radio App and search for “Empowerment Radio Network”. Visit his website www.AfricanHistoryNetwork.com for more information about his lectures, DVDs, our history and podcasts of the show.
You can follow him on Twitter @MichaelImhotep and his Facebook FanPage, “The African History Network”. He is available for interviews and lectures. He is a strong advocate of African Americans reclaiming their history, culture and controlling the economics, education and politics in our community. He is featured in the upcoming documentary, “Black Friday” which deals with African Americans controlling our $1.2 Trillion economy and creating intergenerational wealth. Visit www.AfricanHistoryNetwork.com for more information.