On February 2, the Consumer Financial Protection Agency and the Department of Justice announced a $21.9 million dollar settlement with the Toyota Motor Credit Corporation. According to the CFPB and the DOJ, Toyota Motor Credit policy, which gives auto dealerships discretion in how much interest rate markup they pass along to consumers, resulted in higher rates for African-American and Pacific Islander loans. The consent order requires Toyota Motor Credit to pay up to $21.9 million in restitution to thousands of those African-American and Asian and Pacific Islander borrowers who, the agencies allege, “paid higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness, as a result of its past practices.”

This settlement marks the fourth recent action taken by the CFPB and DOJ involving fair lending risk in auto dealer incentives and discretion and highlights how regulators are increasingly using data to track UDAAP and Fair Lending violations and expect financial services agencies of all types to balance employee discretion with non-discrimination policies.