The Justice Department and the Consumer Financial Protection Bureau on Tuesday announced a settlement resolving allegations that Torrance-based Toyota Motor Credit Corp. discriminated against black and Asian/Pacific Islander borrowers in auto lending.
Toyota has agreed that it will not increase rates it quotes to car dealers as well as limiting the discretion of its dealers to charge interest rate markups.
The $20 million settlement will provide compensation to those who took out loans from Jan. 2011 up until last month. In addition, the company will also pay $2 million to black and asian borrowers with markup disparities.
“TMCC does not tolerate discrimination of any kind, even perceived or unintentional, from its employees or business partners — this principle extends to fair lending practices,” according to the company.
“While TMCC respectfully disagrees with the agencies’ methodologies to determine whether industry lending practices have been discriminatory, the company shares the agencies’ commitment to ensuring that consumers can count on competitive and fair auto financing options,” the statement continued. “The actions TMCC will take under this agreement are intended to further that commitment.”
The Equal Credit Opportunity Act prohibits such discrimination in all forms of lending, including auto lending.