Let's say you're at the auto dealership, negotiating terms for your new car. At the next sales desk is a family whose income, credit score, and assets are identical to yours. When all is said and done, however, your loan costs $300 more than your fellow customer's. How come? Most likely, it's because you're African-American and your fellow customer is white. Wait a minute, isn't that illegal, you wonder? Well, sure, but how do you prove it?
Who's overseeing these so-called "interest-rate markups" that so often penalize African-American and Latino customers solely on the basis of race and ethnicity.
Experts from the Center for Responsible Lending, Office of the Controller of the Currency, and other groups described these offensive practices at at a May 22 congressional briefing chaired by CRL staffer and NCL board member Ken Edwards. In addition to congressional staffers, reporters and advocates attended, as did NCL staffer Amy Sonderman myself. Participants also heard from several Representatives, including Hank Johnson, Steve Horsford, and Tony Cardenas, who decried discriminatory interest-rate markups, saying, "People are cheated out of what they've earned!" Rep. Johnson reminded participants that in 2004 Ally Bank (successor to GMAC) paid an $80 million fine to settle a class-action lawsuit filed by the National Consumer Law Center. Despite that, interest rate markups are so lucrative that this discriminatory practice continues.
What can be done? According to Enrique Lopezlira on the National Council of La Raza, Congress should fix the "carve-out" and give the Consumer Financial Protection Bureau statutory authority to regulate car loans by auto dealers. Michael Archer from the Marine Corps Installations East, urged stronger regulation. "Troops need better financial education, but it isn't enough. Many don't even know they've been swindled, and too many don't think it would be effective to register a complaint."
$300 more per car, just because you're African-American. This is one tiny aspect of racial discrimination in our "post-racial" America. Let your Representative know what you think.