Ford Credit Subsidiary Settles Discrimination Case for Nearly $2.5 million

by Mike Bevel, CollectionIndustry.com

Though not admitting to any wrongdoing, Primus Financial Services, an affiliate of Ford Motor Credit Corp., agreed to pay nearly $2.5 million as part of a settlement in a car loan discrimination case.

“We are pleased the settlement upholds our method of purchasing consumer vehicle financing contracts from dealers,” David Korman, Ford Motor Credit general counsel, said in a statement released Wednesday. “This settlement also means we will avoid the expense of continuing the litigation.”

According to plaintiffs in the dispute, Primus had a way of marking up loans for black customers.

Marking up a loan is a practice in which dealers add percentage points of interest to a loan and, in agreement with the finance company, get to keep most of the extra interest money. The plaintiffs claimed Primus marked up loans to black customers more often and by higher amounts than for whites.

Primus officials counter that their credit approval and pricing decisions are based on objective criteria ? such as credit history, debt-to-income ratio and statistical analysis of the customer’s ability to make payments ? that are applied equally to all applications.

The current limits, which will be maintained under the terms of the settlement, are 2.5 percent on contracts with terms up to 60 months and 2 percent on contracts with terms of 61 to 72 months.

There will be a new 1.5 percent limit on any contracts with terms of 73 months or longer. The company’s standard contracts are for 72 months or less.