The NewStandard ceased publishing on April 27, 2007.

Ford Faces Discriminatory Lending Lawsuit

by Madeleine Baran

Mar. 2, 2005 – Tens of thousands of black customers who bought cars from Ford Motor Company are accusing the car manufacturer’s credit division of discrimination in its lending practices. The class-action suit against Ford Motor Credit, which opened yesterday before a federal judge in Nashville, alleges that black customers were charged higher interest rates than white car buyers.

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The lawsuit marks the first time a case against an auto lender accused of discriminatory lending practices has gone to trial. The case concerns markups, a practice in which dealers charge an interest rate higher than the lender requests, and either pocket the difference or split it with the lending institution. Consumer advocates have long sought to restrict and eventually eliminate the practice altogether.

The current lawsuit alleges that Ford Credit’s Primus division discriminated against black car buyers by tacking additional percentage points onto the interest rates of their loans. Between 2001 and 2004, Primus charged 62 percent of its black customers a markup, compared to 41 percent of white customers. In addition, the markups Primus charged to blacks were significantly higher than those charged to whites -- an average of $862 for blacks compared to $475 for whites, according to a study released last year by Mark A. Cohen, an economist at Vanderbilt University.

The financing divisions of other leading car manufacturers, including General Motors, Nissan and Honda have also been accused of discriminatory lending practices. All three companies settled the lawsuits before they went to trial.

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The NewStandard ceased publishing on April 27, 2007.

Madeleine Baran is a contributing journalist.

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