Fifth Third Bank, a Cincinnati-based financial institution with branches in Georgia, has agreed to an $18 million settlement after being accused of charging blacks and Hispanics more than others for auto loans made through dealerships, according to the U.S. Department of Justice.
The banking company also agreed to change the way it prices its loans by limiting dealer markup to 125 basis points, or 1.25 percent, for loans of 60 months or less, and to 100 basis points, or 1 percent, for loans greater than 60 months. Previously, Fifth Third allowed dealers to raise interest rates as they saw fit.
In a consent order, Fifth Bank denied any wrongdoing and said it has “treated all of its customers fairly and without regard to race or national origin.
“Fifth Third enters this settlement for the purpose of avoiding contested litigation with the Department of Justice and to instead devote its resources to serving its customers,” the company said in the settlement.
Fifth Third’s previous business practice, like that of many other major auto lenders, allowed car dealers discretion to mark up a loan’s interest rate and receive greater payments, the DOJ said in an online press release.
“Consumers deserve a level playing field when they enter the marketplace, especially when financing an automobile,” U.S. Attorney Carter M. Stewart of the Southern District of Ohio said. “This settlement prevents discrimination in setting the price for auto loans.”
In addition to Georgia, Fifth Third has branches in 11 other states.
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