FORD CREDIT UNIT SETTLES BIAS SUIT
Nov 9, 2006
Primus is accused of charging blacks higher interest rates for vehicle
purchases than whites.
From Bloomberg News (via LA Times)
Ford Motor Co.'s Primus credit unit has settled a nationwide class-action
lawsuit in which African American car buyers claimed that the lender discriminated
against them.
Primus will limit dealers' discretion to mark up individual customers'
interest rates and will offer at least 200,000 preapproved loans to black
buyers under a settlement filed Tuesday in U.S. District Court in Nashville.
The customers, suing as a group, claimed that Primus allowed dealers to
charge black buyers higher interest rates than whites, adding an average
of $387 to the cost of a vehicle, their lawyer, Edwin Lamberth, said.
The suit is one of several against automakers and banks claiming discrimination
in interest rates. Lending arms of General Motors Corp., Nissan Motor
Co. and DaimlerChrysler settled previously by agreeing to change lending
practices.
Primus, a Ford Motor Credit Co. brand, did not admit wrongdoing.
The settlement "means we will avoid the expense of continuing the
litigation," David Korman, Ford Motor Credit general counsel, said
in an e-mailed statement.
Primus will pay $1.9 million in legal fees and $40,000 in damages to three
car buyers who sued. The company also will pay as much as $550,000 in
costs and contribute $150,000 to consumer education.
The settlement will save black customers more than $20 million on auto
loans, said Lamberth, of law firm Cunningham, Bounds, Yance, Crowder &
Bounds in Mobile, Ala. The class of black buyers comprises about 100,000
individuals, he said.
"The case was about discriminatory markups that were part of Primus'
lending policy," he said. "The settlement seeks to remedy those
effects by reducing the costs of loans to black consumers."
A hearing on preliminary approval is set for today in the Nashville court.
Primus primarily provides loans on vehicles from Ford's Jaguar, Mazda
and Land Rover units.
The buyers accused Primus of allowing dealers to mark up interest rates
based on customers' credit ratings. The practice encouraged subjective
markups having a "widespread discriminatory impact" on black
customers, the complaint said.
The lawsuit went to a nonjury trial in 2005 before U.S. District Judge
Aleta Trauger.
The judge said she would order the company not to let dealers mark up
interest rates. She delayed the order to give Primus and attorneys for
the buyers a chance to negotiate a settlement.
Ford shares fell 10 cents to $8.63.