On June 29, 2021, the New York Department of Financial Services (DFS) announced it entered consent orders with two New York-based banks for allegedly violating New York’s fair lending laws in the course of providing auto loans. The banks will pay $275,000 and $350,000 in penalties to the state to resolve the allegations.
DFS alleged that the banks’ practices resulted in members of protected classes (in particular, race and/or ethnicity) paying higher interest rates than non-Hispanic white borrowers, regardless of their credit worthiness. According ot the DFS, their investigation found that the banks failed to monitor the interest rates automobile dealers charged members of protected classes.
As a result of the settlement, one bank voluntarily discontinued its indirect automobile lending program. It will pay a $275,000 penalty to New York, provide restitution to eligible buyers, and give $50,000 to local community development organizations. The other bank will pay a $350,000 penalty to New York, provide restitution to eligible buyers, and undergo remediation and monitoring.