LOS ANGELES (Legal Newsline) – The Department of Justice and Consumer Financial Protection Bureau (CFPB) reached a settlement agreement with Toyota Motor Credit Corp. that resolves allegations the company discriminated against African-American and Asian/Pacific Islander borrowers in auto lending.
Toyota agreed as part of the settlement to significantly limit the discretion of its car dealers to use mark ups when it comes to interest rates on Toyota loans. Additionally, $19.9 million will be given in compensation to borrowers who took out loans from January 2011 to January 2016 and had to pay higher mark up because of the alleged discrimination.
“Toyota’s reforms will level the playing field to ensure that all eligible borrowers – regardless of their race or national origin – can sign auto loans with fair terms and reasonable interest rates,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “While dealerships deserve fair compensation for the valuable customer service they provide, federal law protects consumers against higher price mark ups simply because of what they look like or where they come from. We commend Toyota for crafting a new compensation system that strikes an appropriate balance for dealers and consumers.”