Top News

U.S. Judge Allows Woman's Discrimination Claims Against Santander to Proceed

March 8, 2016

CHICAGO — A U.S. district judge has allowed an African-American woman to pursue claims of discrimination against Texas-based Santander Consumer USA, but the finance source was successful in getting other claims contained in the borrower’s class action suit dismissed.

Joyce Pettye claimed she was duped into buying “void and worthless” GAP coverage on a vehicle she purchased last year. She then sued Santander for purchasing the retail installment sales contract, claiming the finance source violated the Illinois Motor Vehicle Retail Installment Sales Act and the federal Truth in Lending Act when it purchased the retail installment sales contact (RISC).

Pettye then amended her complaint this past November, charging Santander with violating the Equal Credit Opportunity Act for engaging in the “discriminatory practice of encouraging dealers to aggressively market add-ons and interest rate markups after approving the deal at the buy rate when selling vehicles to African-American women.”

Santander moved to dismiss the amended complaint. But on Feb. 23, U.S. District Court Judge Amy J. St. Eve granted dismissal of Pettye’s original Truth in Lending charges.

On March 5, 2015, Pettye purchased a 2012 Ford Focus  at Al Piemonte Super Car Outlet in Northlake, Ill., for $13,000. According to court documents, she agreed to finance her purchase and pay $385 per month for 72 months at an interest rate of 27.06%. Including taxes, finance charges and fees, that brought the total price to $29,785.

Included in the “amount financed” section of the RISC she signed was an $895 charge for GAP, which Pettye claimed was never disclosed. If it had, she said, she would never have purchased the coverage, which she later discovered was void and useless because her interest rate exceeded the program’s 24% annual percentage rate cap.

In her decision, St. Eve wrote that Santander’s liability under the TILA was limited because it was not the originator of the agreement. She noted that Pettye’s charge that she was sold voided GAP coverage was a matter of contract law, not the TILA.

St. Eve ultimately dismissed the TILA claim because on the face of the GAP ADDENDUM Pettye signed was an all-capital-letter, standalone paragraph that stated the price of the coverage, that the coverage was voluntary and not required to receive financing. It also stated that by signing, Pettye would be agreeing to the coverage.

Pettye’s claim that Santander violated the Illinois Motor Vehicle Retail Installment Sales Act was also dismissed because it was contingent on the suit’s TILA claim. The judge, however, denied Santander’s motion to dismiss Pettye’s claim of disparate impact discrimination under the Equal Credit Opportunity Act.

According to court documents, Pettye’s attorney used statistics to argue that instances where specific pricing and markup policies involving services such as GAP occurred more often with African-American women than with white consumers. He further alleged that “the disparities between the terms of the credit transactions involving African-American women and the terms involving white consumers, and white men specifically, could not have occurred by chance and cannot be explained by factors unrelated to race and gender.”

St. Eve ruled that the plaintiff provided enough evidence to support her discrimination charge and denied Santander’s motion to dismiss the claim.  

Comments

  1. 1. F&I Dude [ March 09, 2016 @ 11:02AM ]

    I don't really care what the outcome of this case is, but 27% for 72 months? Who in the world would agree to that? Absolutely mind boggling. Get yourself a $2K clunker for cash and make due with it for a few years.

  2. 2. howell clark [ March 12, 2016 @ 10:35AM ]

    its judges like this that make credit harder and harder for folks of less than stellar finance histories or no history at all to even get financing. funny how illionois , a great bastion of liberal democrat rule and home to obama allows an interest rate like that to begin with. companies will only do whats allowed and it sure seems like the libs in that state have failed their constituents not santander.

  3. 3. Ryan [ March 12, 2016 @ 11:12AM ]

    I'm not saying it was racially motivated. They would have done this to anyone that would have agreed to let them, black, white, or whatever else someone might be. However, just because someone's credit sucks doesn't mean we should pile on worthless products. And yes, in this case the product was worthless because the interest rate voided the gap insurance. It's on the dealer to know better than to sell something that is voided by the terms of the contract, and Santander should have been smart enough to not fund that deal with the voided product on it. The woman was actually wronged, not necessarily because of her gender or race. But nonetheless, she was wronged.

  4. 4. DeeRoop [ March 14, 2016 @ 07:20AM ]

    Dear H C,
    It is sad if you believe what you said; “its judges like this that make credit harder and harder for folks of less than stellar finance histories or no history at all to even get financing.”
    What are you trying to say? A customer with a poor credit history should roll over and allow the finance department to take advantage of him or her, or risk being denied credit?
    If that your point of view, why ask your Special Finance customers complete a credit application at this point? Just select the car, the payment and the conditions you see fit for them and make them comply or suffer further penalties.
    I agree with F&I Dude that 27% for 72 months is mind boggling, but unfortunately there’s often another criminal willing to sell a woman in her situation a $2,000.00 clunker that will end up costing her more than it’s worth. You know, the trade that came in for $500.00 and isn’t roadworthy.
    Why not put her in a reliable car she can manage for 15%? It’s at least 10% to 12% above the rate that nice people are paying. Why do we continue treat credit challenged people the way society used to treat the mentally and physically challenged in the dark ages?
    We hope to retain our customer as a service client and in turn they will hopefully buy another vehicle and refer friends and family. We spend thousands every month shouting about caring for the Special Finance customer and saying we put their interest first, yet we think we are so slick that we try to outsmart them for every cent we can.
    F&I managers everywhere, it’s time to start looking at folks with less than stellar finance histories as just plain old folks. Them there will be no need to talk about lawsuits and worrying if our business practices comply with the standards of the state. Doing other than that can be termed as credit discrimination.
    Remember; you may be above credit issues today, but you’re not immune to it. Just be kind to others.

  5. 5. Mike [ March 19, 2016 @ 08:22AM ]

    It amazes me that people sign a contract without reading the fine print? If more people would look at what they are signing then there would be no misunderstandings that require less than scrupulous attorney's. I get folks with less than perfect and even some with terrible credit that I cannot believe the bank approved. I have been in this industry since 1988, when people with 700 credit were paying 9 to 12% interest for auto loans. Then I can see someone having to pay 27% however in these days when the money costs the lenders less than 3% then yes they are putting themselves in the line of fire, not to mention the ungodly fee's they charge the dealer because they cannot charge the customer anymore. So I have no sympathy for the bank's that charge these kinds of items!

 

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

Black Book: Mid-Size Cars See No Depreciation in February

The vehicle information firm reported that all segments reviewed showed less than 2.7% depreciation except for full-size pickups.