NASHVILLE, Tenn. -- Ford Motor Co.'s finance arm was accused in a class-action lawsuit on Tuesday of discriminating against blacks, and "subsidizing" white car buyers by charging black people more for car loans.
Primus Automotive Financial Services Inc., a unit of Ford Credit, offered incentives to car dealers to increase interest rates on auto loans granted to black buyers "for reasons other than credit worthiness," Clint Watkins, an attorney with the watchdog group Consumer Federation of America, told the Middle District of Tennessee court in Nashville.
Ford denied the charges, saying that dealers are independent and are not controlled by Primus.
"Their association with Primus is absolutely voluntary," Ford attorney Tom Byrne said.
Watkins spoke in the opening statement of the class-action lawsuit that is the first such case to go to trial. Similar cases were brought against finance arms of General Motors, Nissan Motor Co. Ltd. and Honda Motor Co. Ltd., but they were settled out of court.
Primus -- which offers vehicle loans to consumers for Mazda, Land Rover and Jaguar brands -- encourages the practice known as "auto finance markup," Watkins said.
"African Americans are much more likely to be marked up and by higher amounts than whites and, in effect, are subsidizing whites," Watkins told District Judge Aleta Trauger.
"You will hear testimony from dealers that they are required to use Primus forms and must comply with all Primus policies," he added.
Watkins said he is not seeking any damages but wants the judge to stop the lending firm from continuing the practice.
A Ford Credit spokeswoman did not immediately return a phone call.