The Consumer Financial Protection Bureau may be attacking alleged discrimination among auto lenders in a new way, citing rules that require lenders to treat “reliable” public assistance income the same as other income, according to attorneys specializing in compliance.
Auto lender Santander Consumer USA Inc. recently disclosed the CFPB had referred “certain alleged violations” of the Equal Credit Opportunity Act to the U.S. Department of Justice.
Allegations against SCUSA involved “statistical disparities in markups charged by automobile dealers to protected groups,” the Aug. 10 disclosure said. That appears to be familiar ground for the CFPB.
However, SCUSA said allegations also included “the treatment of certain types of income in the company’s underwriting process.” That’s new, attorneys said. SCUSA declined to comment beyond a written statement that said in part, “The Company does not believe that there are any proceedings, threatened or pending, that, if determined adversely, would have a material adverse effect on the consolidated financial position, results of operations, or liquidity of the Company.”
In a generic explanation of ECOA aimed at consumers, the CFPB says on its website that lenders may not discriminate, “because all or part of the applicant’s income derives from any public assistance program.”
Maybe that’s what SCUSA means in its disclosure, said Benjamin Diehl, a Los Angeles-based attorney for law firm Stroock & Stroock & Lavan LLP. Separately, another compliance attorney who asked not to be named speculated the same thing.
“I don’t have any inside, or outside, information for that matter,” Diehl told Auto Finance News last week. “But it’s possible that sentence [in SCUSA’s filing] could relate to that [rule].”
