According to Fitch Ratings, the CFPB’s examination of auto lenders’ potentially discriminatory practices may raise lender regulatory costs in 2014. The CFPB started investigating the auto finance industry to determine whether it is discriminating against consumers based on race, violating the antidiscrimination provision of the Equal Opportunity Act. One financial institution informed the CFPB that it purchases installment contracts originated by auto dealers, rather than lend to consumers directly. The financial institution maintains that it does not receive information about the consumer’s race or ethnicity during these transactions. Fitch noted that the CFPB does not have jurisdiction over auto lenders, and that they may be trying to regulate the auto lenders practices indirectly by taking action against the lenders.
Read the Fitch press release.