$25 Million Honda Discrimination Settlement for Overcharging Minorities

Honda Discrimination Settlement

$25 Million Honda Discrimination Settlement for Overcharging Minorities

Honda Motor Company’s American Finance Corporation agreed to pay $25 million to settle federal investigations into allegations of charging minority borrowers higher auto loan interest rates than white customers. The Justice Department accused American Honda Finance Corporation of overcharging black, Latino, Asian and Pacific Islander car buyers by allowing dealerships to markup individual loan interest rates, resulting in illegal discrimination. The Honda discrimination settlement states the corporation to have “engaged in a pattern or practice of discrimination on the basis of race and national origin,” whereby minority customers paid more for their loans than non-minority customers with similar credit histories. Since Honda is an indirect lender, auto dealers have the ability to increase interest rates by as much as 2.25% before submitting minority buyers’ application to Honda’s finance corp.

Honda Discrimination Settlement Pushes Federal Officials to Alter Lending Practices by Other Auto Companies

The Justice Department and the Consumer Bureau have focused (in) on discrimination by attempting to alter lending practices by other auto companies. According to Vanita Gupta, head of the Justice Department’s Civil Rights Division, federal officials “…are looking at the entire spectrum of the auto-lending market,” since discriminatory practices in auto loans is a “pervasive problem.” In 2013, Ally Financial Inc., former consumer-credit unit of General Motors Co., paid $94 million to settle an investigation on its lending practices. Ms. Gupta said Honda’s new lending compensation system “balances fair compensation for dealers and fair lending for consumers” in an effort to address discriminatory pricing and hopes Honda’s leadership will spur the rest of the auto industry to constrain dealer markups.

$25 Million Honda Discrimination Settlement: What Should Minority Consumers Expect?

Honda will contact affected borrowers and refund money overpaid on their loans resulting from higher interest rates. The company’s pricing policies from 2011 through this summer led to allegations the average black borrower paid more than $250 in borrowing costs over the life of the loan, the average Latino victim paid $200 in additional costs and the average Asian and Pacific Islander paid more than $150 in such costs.

Since the company will not pay any civil penalties, federal officials settled that Honda instead will pay $24 million to an established fund for overcharged auto buyers. In addition, Honda agreed to spend $1 million on a financial education program for minorities that will teach consumers about auto loans.

Additionally, the Consumer Financial Protection Bureau (CFPB) will make a public announcement and post information on their websites regarding the compensation process. If you would like to submit a complaint, consumers are encouraged to contact the CFPB at (855) 411-2372.

Did you Experience Discriminatory Actions? Call 1-800-THE-LAW2 Now!

No act of discrimination is acceptable; whether it is blatant or subtle. The $25 million Honda discrimination settlement exemplifies how taking action can bring forth justice. If you believe you have been discriminated against, talk to a discrimination lawyer from 1-800-THE-LAW2. Our attorneys are seasoned professionals who conduct high-quality investigations and work with experts in all types of discrimination lawsuits. Putting a stop to discrimination starts with taking action. Call 1-800-THE-LAW2 for your FREE legal consultation with one of our discrimination lawyers! We’re open 24/7, 365 days a year. Call today, either you get paid or you don’t pay at all!



  1. Devlin Barrett. “Honda Settles Claims It Overcharged Minorities.” The Wall Street Journal. July 15, 2015. Print.
  1. Jim Puzzanghera. “Honda to pay $24 Million to Borrowers to Settle Discrimination Probes.Los Angeles Times. July 15, 2015. Print.


For Further Reading:

  1. American Honda Finance Settlement Information