Honda’s Racial Bias Case Settled By Company Paying $24 Million

Honda’s racial bias case has been settled, with the company paying $24 million.

According to an investigation by United States regulators, it was discovered that the Japanese-based company had been charging African American and Hispanic owners higher interest rates on car loans, the BBC News reported.

Despite their credit, the Consumer Finance Protection Bureau determined that the minorities were being charged approximately $250 more on the life of their loans than their white counterparts. The affected customers purchased vehicles from January, 2011, to July, 2015. Because the loan applications do not report the customer’s race, they were able to identify the affected customers by looking at where they live and the ethnic origin of their names.

“Discrimination of any kind is intolerable,” Eileen Decker, the U.S. Attorney for the Central District of California, said, according to NBC News. “Other auto companies should follow Honda’s lead in taking steps to ensure that their sale and financing practices do not result in discrimination.”

The American Honda Finance Corporation (AHFC), the company’s loans arm, said that they disagree with how the racial bias was determined, but agreed that all people, even minorities, should receive equal treatment.

While they disagree with the complaint, they said, “we nonetheless share a fundamental agreement in the importance of fair lending,” and they are currently working to change their pricing and compensation system to avoid any further discrimination cases.

“AHFC strongly opposes any form of discrimination, and we expect our dealers to uphold this principle as well. We firmly believe that our lending practices have been fair and transparent,” the company said in a statement, according to Fox28.

The AHFC does not make loans directly to the consumers. Rather, the car dealers will send in the customers loan application to the AHFC. The dealers are at the discretion to change the interest rates based on the customers credit profile.

Honda is settling the complaint, made by the United States, and their financial services branch will be paying out a whopping $24 million. They will also have to limit the car dealers’ interest rate markups to anywhere between one and 1.25 percent, according to the agreement. The regulators also said that the company will be responsible for paying $1 million into an auto finance education program for the minority customers.

Honda is currently the nation’s ninth largest auto lender.

Do you think Honda’s punishment for their racial bias was fair? Leave your comments below.

[Photo by Justin Sullivan / Getty Images]