About 235,000 Ally Financial Inc. customers who want part of an $80 million settlement have until Oct. 24 to apply for a refund from the administrator in the case.
To qualify, consumers must have financed a vehicle with Ally between April 1, 2011, and Dec. 31, 2013, according to an online FAQ. They must have been overcharged, as defined in the settlement, and the borrower must sign a form that says they or their co-signer (if any) belong to a protected group named in the consent order.
Ally settled discrimination charges based on dealer markup on auto loans, with the Consumer Financial Protection Bureau and the U.S. Department of Justice in December 2013. In June, an independent administrator started sending out instructions to consumers for how to get a refund.
The CFPB and the DOJ said regulators identified about 100,000 African-American borrowers who paid an average of $300 more than the average for non-protected classes, and about 125,000 Hispanic borrowers and 10,000 Asian or Pacific Islander borrowers who paid $200 extra.
However, the statistical method regulators use to identify members of protected classes is highly controversial. Attorneys for the auto finance industry protest that the statistics produce inaccurate results. Auto lenders aren’t allowed to collect data on race and ethnicity, so regulators use “proxies” for the actual data, based on customer names and addresses, to assign a likelihood whether a specific individual belongs to a protected class.
For more content like this, check out the upcoming Auto Finance Summit, October 21-23 at Wynn Las Vegas. Visit www.AutoFinanceSummit.com for more information.
