Federal Prosecutors, CFPB Eye Discriminatory Auto Financing

Federal Prosecutors, CFPB Eye Discriminatory Auto FinancingA senior official at the Justice Department said federal prosecutors are looking into possible discrimination in auto financing.
Justice is partnering with the Consumer Financial Protection Bureau to investigate certain transactions involving auto dealers marking up the interest rate on car loans they arrange through lenders.
The practice, which boosts the profit on a car sale by hundreds of dollars, is legal, unless minorities are hit with higher fees or rates. Consumer advocates argue that auto dealers should follow fair-lending laws.
“We have a number of ongoing joint investigations in the indirect auto-lending space,” Steven Rosenbaum, chief of the housing and civil enforcement section at Justice, said at a forum hosted by the CFPB on Thursday, according to the Washington Post.
In a recent regulatory filing, Ally Financial reported that the CFPB had accused the company of failing to prevent auto dealers from violating the Equal Credit Opportunity Act. The auto lender warned investors that the case could result in fines or a settlement.
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