Ally Financial Inc. is under fire from the Consumer Financial Protection Bureau for allegedly taking inadequate steps to prevent auto dealers from violating laws against discriminatory lending, according to a regulatory filing Tuesday.
“The staff of the CFPB has recently advised us that they believe we have an obligation to prevent independent automotive dealers with which we do business from engaging in certain retail financing practices that the CFPB believes violate the anti-discrimination provisions of the Equal Credit Opportunity Act, and that we have failed to fulfill this obligation,” according to the 10-Q filing.
Ally had previously disclosed that the CFPB was investigating its retail financing practices. According to The Wall Street Journal, the added disclosure follows warnings by the CFPB that auto lenders will be held responsible for certain practices by dealerships.
A CFPB spokesman told Auto Finance News in an email statement that the bulletin the Bureau issued in March explained how the Equal Credit Opportunity Act (ECOA) applies to indirect auto lenders, and provided guidance on ways to limit fair lending risk. ECOA makes it illegal to discriminate in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, and age.
Earlier this week, Patrice Ficklin, Assistant Director of the CFPB’s Office of Fair Lending and Equal Opportunity, posted a blog to further explain the CFPB’s position.
