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CFPB: Consumers Will Soon Receive Ally Payout

June 23, 2015

By Brittany-Marie Swanson

WASHINGTON — The Consumer Financial Protection Bureau (CFPB) released details last week about plans to reimburse consumers allegedly harmed by Ally Financial’s auto lending practices. The announcement comes a year and half after the regulator, together with the Department of Justice, reached a $98 million settlement with Ally — $80 million of which was earmarked to compensate victims of the finance source’s alleged discriminatory practices.

“We found that Ally had a policy of giving dealers the discretion to increase or ‘mark up’ consumers’ interest rates, and paying dealers for those markups,” Patrice Ficklin, the CFPB’s assistant director of Fair Lending and Equal Opportunity, explained in the June 15 blog post. “We found that between April 2011 and December 2013, Ally’s markup policy resulted in African-American, Hispanic, Asian and Pacific Islander borrowers paying more for auto loans than similarly situated non-Hispanic white borrowers.”

Ficklin went on to explain that Ally will also compensate borrowers who were affected by the finance source’s policies after December 2013. “… Ally has already started paying some of those borrowers,” she noted.

As for borrowers who obtained a loan between April 2011 and December 2013, Ficklin said the Ally settlement administrator, Philadelphia-based Heffler Claims Group, will be locating them and mailing checks in the coming weeks.

“If you think you are eligible, you should look for a package explaining the specific minimum amount of money that you may be eligible to receive,” Ficklin wrote, in part. “Your actual payment amount may be greater, depending on how many borrowers participate in the settlement.”

The methodology used by the CFPB to determine whether minorities are paying higher rates for auto loans has been called into question by the auto finance industry since the regulator issued its much-contested fair lending guidance in March 2013. A study conducted by Charles River Associates for the American Financial Services Association (AFSA) found that the Bayesian Improved Surname Geocoding (BISG) proxy methodology used by the CFPB accurately identified a customer’s race only 25% of the time. The methodology is used by the CFPB because auto finance sources are prohibited from collecting data on a borrower’s race or ethnicity.

“If you don’t receive a package in the mail by July 15, 2015, but you think you should receive a payment, you can call the Ally Settlement Administrator to ask about your eligibility,” Ficklin added.

Ally has maintained that it does not engage in discriminatory auto lending practices.

“Ally’s long-time process for evaluating auto installment contracts from dealers does not include information on a consumer’s race or ethnicity,” the company said in a statement following its settlement with the CFPB and DOJ. “Ally assesses these contracts and sets pricing based solely on a consumer’s creditworthiness and contract characteristics.”

Comments

  1. 1. Kellis [ June 28, 2015 @ 08:22AM ]

    "We found that Ally had a policy of giving dealers the discretion to increase or ‘mark up’ consumers’ interest rates, and paying dealers for those markups"
    I don't understand this, 95% of all banks allow mark up's or at least some compensation plan for the dealers when they refer them business...If the consumer is not satisfied with the rate they all have an option of either getting their own financing or refinancing the loan... Now, if the client has a history of not paying their obligations then it's considered a higher risk loan and the rate is also higher, the dealership should be compensated because many of these clients are very difficult to get approved...

  2. 2. WiseGuy [ August 10, 2015 @ 04:27PM ]

    This is bullshit.. The lawyers are making the money here not the victims. 200 dollars or more is the payout? How about paying a large portion of my car note instead.

  3. 3. peaches53 [ August 19, 2015 @ 08:20AM ]

    What i want to know is how can i get my car note lower if i was charged a higher interest and will i receive my payout on the loan

  4. 4. Prince [ August 28, 2015 @ 06:06AM ]

    How much will be left over for the consumer once the lawyers take most of it?

  5. 5. queen [ August 30, 2015 @ 07:31PM ]

    I brought a 2013 hyundai elantra in 2013. I didn't dissect the contract until about 6 months later. I called and try to have the situation ratified. They over charge me for the vehicle with a interest rate of 16.99%. I had to pray about it and the Lord led me to go back to that dealer. I told them I believe I was discriminated because of being a Africian American woman. I was offered a 2014 Sonata with a 6% interest and car payment was almost a hundred dollars cheaper. I knew in my heart that something was not right. Why did they charge for destination? Gave me new tags that I did not need. No rebate no discounts . It was a discrimination. I did not get a lawyer.

  6. 6. Informed Citizen [ September 04, 2015 @ 08:37AM ]

    queen, your first issue is praying to god about a car loan. That is exactly why they pulled the wool over your eyes and stuck you with a ridiculous interest rate. Instead of praying about it, take that time to research interest rates & car fees. You'll be more informed the next time you go shopping. They gave you 6% , 6 months later? I'll bet you that you were probably eligible to get a better rate than that. Your credit score doesn't change that much in 6 months to see a 10 point swing in interest rate. you should ALWAYS change tags when you buy a car, destination is a standard fee for new car purchases, etc. God doesn't care about your interest rate or your credit rating. Get informed. And yes, I am a minority just like you...

  7. 7. Carmen Killingham [ September 15, 2015 @ 09:10AM ]

    I agree how about paying out some cash to reduce the payment with interest and all the other bells and whistles!

  8. 8. Gwen Wright [ September 17, 2015 @ 09:08AM ]

    Who are you to tell someone that they are wrong to pray to God first? Before buying a vehicle we should all do our research of course. But don't come down on someone because they put God first. Shame on Ally and shame on you

  9. 9. Marie [ September 22, 2015 @ 07:08PM ]

    The fact of the matter is, this is proving DISCRIMINATION, if ally would have charged everyone the same and not differentiate based on color, they wouldn't have had a lawsuit on their hands. It is true that the lawyers in this case are making the most money but that's why ppl like us should still fight and write letters to either settle our account, drop the interest rates, or offer to pay the negative equality. As a "Hispanic" person and my husband being a black man, I find it very unsettling that Ally would expect any future payments or still be bind to the "contract" which in fact they breached. The oxymoron in it all. No different than Donald Trump!

  10. 10. Ineedmoney [ September 30, 2015 @ 05:43PM ]

    show me the money

  11. 11. Jesse [ October 23, 2015 @ 07:50PM ]

    The lawyers are not making any money it was the Department of Justice, it a Federal lawsuit

  12. 12. Ty [ October 27, 2015 @ 06:34AM ]

    When can we expect this money? I will believe it when I see it......

  13. 13. nikki [ October 28, 2015 @ 06:53PM ]

    I am not 100% convinced its only based on race because my husband is being screwed by ally financial as well. We have been paying on a car since 2012 and yet have only paid 3000 on the principle. And have owed 14000 for the last year. We are seeking an attorney to see what our options are. I think ally screws people with less than perfect credit because they know they are desperate to have a vehicle.

  14. 14. Tamiko [ November 04, 2015 @ 05:22PM ]

    I was advised via letter, that the settlement will payout $300.

  15. 15. Jk [ November 18, 2015 @ 01:33PM ]

    How can there be discrimination when the bank approving the loan has no idea what ethnic background someone is?
    This is a shakedown of banks just to get money. Nothing new from this administration.

  16. 16. katherine gordon [ November 23, 2015 @ 06:11PM ]

    399is all I'm worst cause I'm black kmsl

  17. 17. Rese [ December 03, 2015 @ 07:27AM ]

    Kellis, SHUT UP. Your comment makes no sense. the lawsuit is for discrimination (higher rates/charges to minorities), nowhere does it say people are getting compensated for obligations of NON-payment or rates. AND in what way are the dealers affected by this. They got their commission.

  18. 18. victor watson [ January 02, 2016 @ 02:38PM ]

    when will they refund this money

  19. 19. tred [ January 05, 2016 @ 08:43PM ]

    I called today asking when to expect payment and was told checks are being mailed in January through the end of March 2016

  20. 20. Rho [ January 07, 2016 @ 05:25AM ]

    How do you know for sure if your getting a check and how much?

  21. 21. Rho [ January 07, 2016 @ 05:26AM ]

    How do you know for sure if your getting a check and how much!

  22. 22. Audrey [ January 11, 2016 @ 12:17PM ]

    hello to the people thank you for your suport. iI do have some very much conserns about how dod they come up with accual figures and the current amount. even up to the end of the payment note. because when i loked on the web site to get accert answers i see ther arent a area set to give specfic. such as since the Ally was and before the setteld my intrest rate was fixed at 7.49% back in 2011. since i found about the settelment i had believed the Ally would gladly lower my precentage rate. well it behooves me. they said no. yet my car note is not up until 2019. look i have two more qustions in addition. Are all the calculation condsiderd evenn up to the ending date of my last car note payment? By the last check that will be disburst the people, will there be any money left over? if so the will the people be notified ahead of time?

  23. 23. Ruby Chavis [ January 19, 2016 @ 12:19PM ]

    Waiting for my money?

  24. 24. Rho [ January 25, 2016 @ 05:53AM ]

    I called to check about when or if I would get s check and when I told her my name, she said she didn't see my name. I faced it over there back in October so I called to verify they got it and she said yes. So this is questionable.

  25. 25. Cyn [ January 26, 2016 @ 09:09AM ]

    When will we get the check?

  26. 26. Steven Mckinnis [ January 27, 2016 @ 04:57PM ]

    I just want to know when will the checks will be mailed out and if i will be getting one.

  27. 27. Tiffany [ January 29, 2016 @ 08:21AM ]

    Can't wait to receive my funds...this will be very helpful....Does anyone have the phone number that I can call to check if they received the form that I sent back to them?

  28. 28. Tisy [ January 29, 2016 @ 08:56AM ]

    The number to call is on [email protected] to inquire about checks.

  29. 29. JC [ February 01, 2016 @ 10:13PM ]

    It's accurate... I received my check today in the mail. What a great surprise!

  30. 30. Ryu [ February 02, 2016 @ 05:38AM ]

    I got $170 yesterday, Feb1. I know it's better than nothing.

  31. 31. David [ February 08, 2016 @ 10:44AM ]

    Ryu,

    What state r u in? just want to know how soon I should be looking for my check.

  32. 32. Vivian [ February 11, 2016 @ 03:20PM ]

    I received my check today very surprised!

  33. 33. Willie Mae Lush [ March 17, 2016 @ 08:08AM ]

    After distribution of checks, will Ally also lower interest rates so customers monthly payments will be reduced.

  34. 34. Mary Richardson [ June 21, 2016 @ 02:07PM ]

    I purchased a 2011 Chrysler 200 in December 2012, and In know I have been overpaying and overcharged for it. I looked into Refinancing it to a lower rate about a year ago, and Ally informed me they do not Refinance Auto Loans. What bank doesn't refinance??? Wow. They have no actual structure for a Bank that you can walk into either. I know the Dealership and Ally are in cahoots with each other. I am female and Caucasian with a fixed income due to a Disability. I have been taken advantage of in the worst way, and its not just happening to African-American, Hispanic, Asian and Pacific Islanders. I did not receive an Information Packet that I know of ....but I have moved a few times and to top it off I am living in an expensive car that I am paying more than a 2015 Chrysler 200 sticker price. I have seen the 2015 Chrysler 200 sold for under 17,000. this makes me so angry!!!!!!

 

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