JPMorgan Chase said in a regulatory filing Tuesday that it is in “discussions” with the U.S. Department of Justice about markups in auto loans amounting to potential discriminatory practices.
It was just a brief mention in the filing, but the investigation involves serious charges that race and ethnicity allegedly played a part in the loan markups.
“The Firm (JPMorgan Chase) is engaged in discussions with the U.S. Department of Justice (“DOJ”) about potential statistical disparities in markups charged to different races and ethnicities by automobile dealers on loans originated by those dealers and purchased by the Firm,” said JPMorgan Chase, the country’s biggest bank.
The Justice Department and the U.S. Consumer Financial Protection Bureau have been looking into the practices of auto lenders for possible racial discrimination.
In March 2013, the Consumer Financial Protection Bureau warned “indirect auto lenders” that they can be sued for unlawful, discriminatory pricing.
Indirect auto lenders let dealers charge an interest rate that is costlier for the consumer than the rate the lender gave the dealer. Certain lenders that offer these loans through dealerships are “responsible for unlawful, discriminatory pricing,” the CFPB said in a bulletin back then.
The agency is targeting discriminatory markups in auto lending that can add up to tens of millions of dollars in consumer harm each year.
“Consumers should not have to pay more for a car loan simply based on their race,” said CFPB Director Richard Cordray said in 2013. “Today’s bulletin clarifies our authority to pursue auto lenders whose policies harm consumers through unlawful discrimination.”