honda financial services customer service
The department and the Consumer Financial Protection Bureau today announced that Honda Finance Corporation has reached a $24 million settlement with the United States to resolve claims that it violated the Equal Credit Opportunity Act by engaging in a pattern or practice of discrimination against thousands of African-American, Hispanic, and Asian/Pacific Islander borrowers in auto lending. The settlement will pay compensation to victims and will also help address ongoing discrimination by limiting the discretion of dealers to mark-up consumers’ interest rates on auto loans. The settlement also requires that Honda experiment with different approaches toward lessening discrimination and report to the department and CFPB on the results.
Honda operates as an indirect auto lender and conveys its loans to car dealers nationwide. Under this business model, Honda sets a “buy rate” that includes the loan’s risk-based interest rate, and then allows the dealer to charge a higher interest rate to the consumer when they finalize the loan. These higher rates, known as “dealer markups,” generate additional compensation for the dealer.
The settlement, which must still be approved by a federal judge, will resolve allegations that Honda engaged in this discriminatory pricing and compensation scheme by charging a higher dealer markup on the auto loans of thousands of African-American, Hispanic, or Asian/Pacific Islander borrowers than it charged non-Hispanic white borrowers, without regard to the borrowers’ creditworthiness or other objective factors. The settlement provides for an administrator to locate and distribute payments of compensation to affected borrowers. honda financial services customer service