Bank Settles $18 Million Dollar Claim Over Raising Rates for Blacks and Hispanics [Picture]

Fifth Third Bancorp is the latest bank to settle claims that it discriminated against African-Americans and Hispanics. The bank agreed to an $18 million dollar settlement on claims that it hiked auto loan rates to minority customers. The Consumer Financial Protection Bureau and the Department of Justice announced the settlement on Monday. The settlement will be paid to borrowers harmed ..

The bank agreed to an $18 million dollar settlement on claims that it hiked auto loan rates to minority customers.

The Consumer Financial Protection Bureau and the Department of Justice announced the settlement on Monday. The settlement will be paid to borrowers harmed by the bank’s discriminatory practices.

According to the federal complaint, “higher markups that Fifth Third charged to African-American and Hispanic borrowers are a result of Fifth Third’s policy and practice of allowing dealers to mark up a consumer’s interest rate above Fifth Third’s established buy rate and then compensating dealers from that increased interest revenue.”

The markups resulted in an average $200 dollar increase being paid by African-Americans and Hispanics during the life of their loans.

“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said CFPB Director Richard Cordray in a statement. “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination. We are also obtaining millions of dollars in relief today for consumers affected by deceptive marketing of credit add-on products.”

“We commend Fifth Third for its commitment to treating all of its customers fairly without regard to race or national origin and its leadership in agreeing to impose lower caps on discretionary markups,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “This agreement shows that the indirect auto lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing.”

Fifth Third denies the allegations.

“When considering whether to purchase a contract from a dealer, Fifth Third does not receive or consider any information about a consumer’s race or ethnicity,” the company said in its statement.source