The Consumer Financial Protection Bureau and the Department of Justice have authorized enforcement actions against American Honda Finance Corp., alleging discrimination in automobile loan pricing, the captive revealed in a Securities and Exchange filing Tuesday. The move comes on the heels of a similar CFPB-DOJ action against Toyota Motor Credit Corp. last week.
AHFC originally announced in May that it had been served a joint letter from the CFPB and DOJ requesting information on pricing practices by dealers originating retail installment sale contracts for automobiles.
“The request for information and the ongoing review was to determine if pricing practices of dealers originating retail installment sale contracts for automobiles resulted in discriminatory pricing of these loans to certain borrowers in violation of applicable laws,” the company wrote in Tuesday’s filing.
AHFC also said that it has cooperated with the agencies’ investigation and provided all information requested, to date. However, in their latest letter, the agencies “informed AHFC that they are seeking monetary relief and implementation of changes to AHFC’s pricing practices and policies,” which, the captive wrote in the filing, “could affect AHFC’s business.”
While both American Honda Finance and Toyota Motor Credit have stated their continued cooperation to resolve the investigations, Attorney Ken Rojc, partner at Nisen & Elliott LLC, said that it is too soon to predict if the companies will be forced to pay monetary fines.
“It’s unclear if there is, in fact, going to be any enforcement actions, or if this is more of a formal announcement that they are being investigated,” Rojc said. “I think what those announcements from Honda and Toyota are doing, is alerting investors that there is a potential for enforcement actions, but there have not been any actions (taken) to date.”