WASHINGTON (AP) — Ally Financial Inc. is paying $98 million to resolve U.S. government claims that it illegally charged minority borrowers higher rates on auto loans than whites with similar credit histories.
Ally is paying $80 million in damages to about 235,000 African-American, Hispanic and Asian and Pacific Islander borrowers, and $18 million in penalties.
The agreement announced Friday by the Justice Department and the Consumer Financial Protection Bureau is the government's biggest auto-loan discrimination settlement to date.
Ally doesn't make auto loans directly to consumers; it buys the loan contracts made by auto dealers. Ally sets an interest rate for the loans and allows dealers to charge customers a higher rate, or dealer markup.
Ally says it sets rates based only on borrowers' credit and that it doesn't practice or condone discrimination.