The CFPB found that, when the dealer was allowed to decide which customers to charge more, people of color, regardless of their credit, most often paid higher interest.
Toyota Motor Credit has also agreed to reduce the amount of markup its dealers can inflate, capping it at 1.25 percent for five-year loans, and 1 percent for loans with longer terms—an agreement that limits the discriminatory practice, but doesn’t eradicate it.
The Toyota Motor Credit Corporation said in a statement that it denies any wrongdoing. It also said it “does not tolerate discrimination of any kind, even perceived or unintentional.”
The Consumer Financial Protection Bureau said the lender hadn’t “intentionally discriminated against its customers, but rather that its discretionary pricing and compensation policies resulted in discriminatory outcomes.” Meaning that even though Toyota’s markup policy didn’t inherently discriminate against some people, it did allow dealers to vary prices. And that variation increased when a person was black, a Pacific Islander, or Asian.
Toyota is not the only auto lender to be investigated for this practice. Recently, Honda’s lending arm and a couple of U.S. banks have all settled with the bureau in similar cases.
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