Fair Lending
CFPB Takes Action Against Fifth Third Bank for Auto-Lending Discrimination and Illegal Credit Card Practices
Company to Pay $18 Million to Minority Auto Borrowers, $3 Million to Credit Card Customers
WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) announced two separate actions against Fifth Third Bank, for discriminatory auto loan pricing and for illegal credit card practices. The joint CFPB and Department of Justice (DOJ) auto-lending enforcement action requires Fifth Third to change its pricing and compensation system to minimize the risks of discrimination, and to pay $18 million to harmed African-American and Hispanic borrowers. The CFPB's action against Fifth Third's deceptive marketing of credit card add-on products requires the bank to provide an estimated $3 million in relief to eligible harmed consumers and pay a $500,000 penalty.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Fifth Third Bank | CFPB, DOJ | Discriminatory auto loan pricing — violated the Equal Credit Opportunity Act by charging African-American and Hispanic borrowers higher dealer markups than non-Hispanic white borrowers, without regard to creditworthiness | $18 million to harmed African-American and Hispanic borrowers ($12 million into a settlement fund, plus credit of $5–$6 million for remediation already provided, with any additional funds paid in to reach $18 million total); no penalty assessed for this action | January 2010 through September 2015 | Dealer markup on auto loan interest rate (race and national origin) |
| Fifth Third Bank | CFPB | Deceptive marketing and sales of "Debt Protection" credit card add-on product, in violation of the Dodd-Frank Act | $3 million in relief to roughly 24,500 customers, plus a $500,000 penalty to the CFPB civil penalty fund | 2007 through February 2013 (fulfillment kit misrepresentations from December 2011 through September 2012) | — |
Justice Department and Consumer Financial Protection Bureau Reach Settlement with Hudson City Savings Bank to Resolve Allegations of Mortgage Lending
Settlement Provides Over $27 Million to Ensure Equal Lending Services to Predominantly Black and Hispanic Communities
The Justice Department and Consumer Financial Protection Bureau (CFPB) filed a consent order today to resolve allegations that Hudson City Savings Bank (Hudson City) engaged in a pattern or practice of "redlining" predominantly Black and Hispanic neighborhoods in its residential mortgage lending practices. "Redlining" is the discriminatory practice by banks or other financial institutions to deny or avoid providing credit services to a consumer because of the racial demographics of the neighborhood in which the consumer lives. This resolution represents the Justice Department's largest residential mortgage redlining settlement in its history.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Hudson City Savings Bank | Justice Department; Consumer Financial Protection Bureau (CFPB) | Redlining predominantly Black and Hispanic neighborhoods in residential mortgage lending, in violation of the Fair Housing Act and Equal Credit Opportunity Act (ECOA) | $25 million loan subsidy fund; $2.25 million for advertising, outreach, financial education, and community partnership efforts; two new full-service branches; $5.5 million civil monetary penalty (total over $27 million) | At least 2009 to 2013 | — |
CFPB Orders RPM Mortgage to Pay $19 Million for Steering Consumers Into Costlier Mortgages
RPM CEO Erwin Robert Hirt to Pay Additional $1 Million Civil Penalty
WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) filed a complaint in federal district court against RPM Mortgage, Inc. and its CEO, Erwin Robert Hirt, for illegally paying bonuses and higher commissions to loan originators to incentivize them to steer consumers into costlier mortgages. The CFPB also filed a proposed order that, if entered by the court, would require RPM to pay $18 million in redress to consumers and a $1 million civil penalty, and would require Hirt to pay an additional $1 million civil penalty.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| RPM Mortgage, Inc. | Consumer Financial Protection Bureau (CFPB) | Violated the Loan Originator Compensation Rule and the Consumer Financial Protection Act (CFPA) by paying bonuses and higher commissions to loan originators to incentivize them to steer consumers into costlier mortgages | $18 million in redress to consumers; $1 million civil penalty (RPM); Hirt to pay an additional $1 million civil penalty | April 2011 through December 2013 | Loan officer compensation / steering |
Justice Department and CFPB Reach Settlement with Provident Funding Associates to Resolve Allegations of Mortgage Lending Discrimination
Settlement Provides $9 Million in Compensation to African-American and Hispanic Borrowers
The Justice Department and Consumer Financial Protection Bureau (Bureau) filed a consent order today to resolve allegations that Provident Funding Associates (Provident) engaged in a pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers who obtained residential mortgages between 2006 and 2011 from Provident's nationwide network of mortgage brokers.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Provident Funding Associates | Justice Department; Consumer Financial Protection Bureau | Pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers, in violation of the Fair Housing Act and Equal Credit Opportunity Act (ECOA) | $9 million into a fund for the benefit of victims of the alleged discrimination | 2006 to 2011 | — |
U.S. Justice Department and North Carolina Attorney General Reach Settlement to Resolve Allegations of Auto Lending Discrimination
Settlement Requires Substantial Improvements to Dealerships' Policies and Provides $225,000 in Relief to Affected Customers
The U.S. Department of Justice Civil Rights Division, the U.S. Attorney's Office for the Western District of North Carolina and the North Carolina Department of Justice today announced a settlement of the federal government's first-ever discrimination lawsuit involving "buy here, pay here" auto lending. The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Western District of North Carolina.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Auto Fare Inc. and Southeastern Auto Corp. | U.S. Department of Justice Civil Rights Division; U.S. Attorney's Office for the Western District of North Carolina; North Carolina Department of Justice | Pattern or practice of "reverse redlining" by intentionally targeting African-American customers for unfair and predatory credit practices in financing used car purchases, in violation of the federal Equal Credit Opportunity Act; also alleged violation of North Carolina's Unfair and Deceptive Trade Practices Act | $225,000 settlement fund to compensate victims of past discriminatory and predatory lending | — | Disproportionately high sales prices, down payments, and interest rates compared to other subprime used-car dealers |
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