honda financial services customer service a division of American Honda Motor Company, is an indirect auto lender. The company makes most of its loans through car dealers nationwide who help consumers finance the purchase of new or used vehicles. Honda Financial Services offers two main types of financing: retail installment sales contracts and leases. The company also sells a variety of related accessories and parts.
In its complaint against Honda, the United States alleged that it engaged in discriminatory pricing and compensation practices that violated the Equal Credit Opportunity Act (ECOA) by charging thousands of African-American, Hispanic, and Asian/Pacific Islander borrowers higher interest rates for auto loans than non-Hispanic white borrowers. These higher rates, on average, resulted in the victims paying more than $250 per month more for their auto loans than they would have if Honda had priced their loans fairly and without regard to race or national origin.
As part of its settlement, Honda agreed to significantly limit dealer markups, and will no longer allow dealers to charge different interest rates for the same loans. In addition, the company will pay $24 million into a fund that will compensate affected borrowers. A third party administrator will locate and distribute payments of the settlement to eligible borrowers. Once details about the administration of this process become available, the department and the CFPB will provide further information to consumers. Honda has also agreed to improve its monitoring and compliance systems. The department applauds the company for its cooperation in reaching this historic settlement. The department and the CFPB will continue to aggressively pursue justice on behalf of American consumers in other sectors such as auto lending, mortgages, credit cards, student loans, payday loans, and debt collection.