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DOJ Settles Rate Discrimination Suit Against Calif. Dealer

September 12, 2013

LOS ANGELES — The United States has settled a lawsuit against a now-defunct Mitsubishi for allegedly charging non-Asian customers higher interest rate markups than other customers for a period of at least three years, the Justice Department announced today.

Union Auto Sales Inc., which was charged with violations of the Equal Credit Opportunity Act (ECOA), agreed to pay $125,000 to resolve the Justice Department’s allegations. The court entered the consent decree on Sept. 4.

The department’s amended complaint, filed in a Los Angeles federal court in March 2010, alleged that Union Auto Sales Inc. — doing business as Union Mitsubishi, as well as other dealerships that are now out of business and in bankruptcy proceedings — charged higher interest rate markups on car loans to non-Asian customers, many of whom were Hispanic, than to similarly-situated Asian customers from at least 2004 to 2006.
   
Union Auto Sales Inc. is not currently in, and reportedly has no plans to re-enter, the business of automobile sales. Under the consent decree, Union Auto Sales will pay up to $125,000 to non-Asian customers who were charged higher dealer interest rate markups. If Union Auto Sales or its principal shareholder re-enter the business of automobile lending within the two-year duration of the consent decree, it will implement clear guidelines for setting dealer markup and pricing in compliance with ECOA, and establish appropriate fair lending training for its employees and officers.   

“The Civil Rights Division enforces federal laws that protect consumers from auto lending discrimination,” said Jocelyn Samuels, acting assistant attorney general for the Civil Rights Division. “Every consumer should be treated fairly in the pursuit of credit, without regard to their race or nationality.”
         
This case came out of a referral from the Federal Reserve Board involving Nara Bank, now part of BBCN Bank. The department entered into a partial consent decree with Nara Bank, a bank that financed many loans for Union Auto Sales and other car dealerships in 2009. The partial consent decree required the bank to pay $410,000 to compensate several hundred non-Asian borrowers who were aggrieved by the alleged discriminatory conduct.

Comments

  1. 1. J. Gonzalez [ September 12, 2013 @ 04:26PM ]

    Were these non-Asains force or coerced into taking out these higher APR auto loans?

    Is it possible that these non-Asians simply acquiesced to higher interest rates? Perhaps they weren't as credit worthy.

  2. 2. D. THERIOT [ September 18, 2013 @ 10:06AM ]

    HOW CAN THIS BE PROVEN????

  3. 3. Aw [ October 05, 2013 @ 12:14PM ]

    Maybe Asians are culturally more conservative and consequently have better credit scores and maybe because of their culture they are better negotiators and therefore got the better rate. Maybe the DOJ should go back and make the Asians pay a higher rate. The company went out of business so obviously they weren't making too much money. Our government is a bunch of economic morons and socialists if not communists!

 

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