Santander Consumer USA Holdings, Inc., one of the largest U.S.
auto lenders, said on Monday that regulators alleged the company
violated fair-lending laws and the matter could be reviewed by the
Justice Department.
In July, the Consumer Financial Protection Bureau told Santander
Consumer USA that it had notified the Justice Department of
instances where it found the company overcharged "protected groups"
of consumers on auto loans made through car dealerships, according
to a regulatory filing Monday by the Dallas-based lender.
Under the Equal Credit Opportunity Act, protected groups of
consumers include racial or religious minorities, among others. A
spokeswoman from the company, which is around 60%-owned by a unit
of Spanish bank Banco Santander, declined to comment beyond the
filing.
The action involving Santander Consumer USA is the latest flash
point in regulators' efforts to curb discriminatory auto lending
practices. Last month, the CFPB and the Justice Department reached
an agreement with American Honda Finance Corp, the U.S. lending arm
of Honda Motor Co., in which the company agreed to pay $24 million
to African-American, Hispanic, Asian and Pacific Islander borrowers
who were illegally charged higher interest rates on car loans.
Different parts of Santander Consumer USA's business have come
under the scrutiny of federal and state enforcement agencies in
recent months. Last year, the company said the Justice Department
and the Securities and Exchange Commission were separately
investigating Santander Consumer's auto lending and securitization
practices.
In February, the company agreed to pay at least $9.35 million to
resolve a Justice Department investigation into whether it
inappropriately repossessed the cars of members of the U.S.
military.
Write to Peter Rudegeair at peter.rudegeair@wsj.com
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