Ford Motor Credit Co. "systematically" charges black customers more for vehicle loans than comparable white buyers, a federal court lawsuit alleges.
The lawsuit was filed last month in Milwaukee. It is the latest in a batch of lawsuits alleging racial bias by an automaker's captive finance company.
Another Ford Motor Co. captive, Primus Financial Services Inc., is a defendant in a similar case in Tennessee. The federal judge in that case suggested she will outlaw dealerships' interest rate markups of wholesale vehicle loans if mediation does not resolve the dispute.
In the Wisconsin case, five black plaintiffs allege that Ford Credit "fails to restrain or control discrimination by its approved dealers." Instead, they allege, the captive incorporates "discriminatory markups" in loan contracts.
The lawsuit does not name any dealers as defendants.
Ford Credit spokeswoman Meredith Libbey says the company does not gather information about race from loan applicants.
If dealers excessively mark up the loans Ford Credit provides, "the penalty is we don't buy the contract," Libbey says.
Since August 2004, Ford Credit has imposed a ceiling of 2.5 percentage points on dealer markups of loans of as long as 60 months. Its ceiling on longer loans is 2 percentage points.
Ford Credit lowered the ceiling from 3 percentage points, a cap that had prevailed since November 2002, Libbey says.
One of the plaintiffs in the Wisconsin case, Etheleen Rogers, says a Ford dealership charged her 27.75 percent in 2002 on a loan financed by Ford Credit on a used 1996 Taurus.
Other plaintiffs say they paid interest rates of 12.75 percent to 15.95 percent on the used vehicles they bought from Wisconsin dealerships in 2000 and 2001. Ford Credit also provided those loans, the lawsuit says.
"Studies have determined that African Americans more frequently are charged a dealer markup, as are Hispanics," says Robert Habush, a lawyer for the Milwaukee plaintiffs. "When it's charged, it's several times what is charged the Caucasians for similar considerations."
Wisconsin Attorney General Peggy Lautenschlager wants the state Department of Financial Institutions to include racial bias in its definition of "unconscionable conduct" as it applies to vehicle loans. Lautenschlager is seeking legislation that would achieve the same goal, says John Vander Meer, a spokesman for the state's Justice Department.
The state's Justice Department has not alleged that Ford violated state or federal law in the transactions cited in the lawsuit, Vander Meer adds.
DaimlerChrysler Financial Services and Toyota Financial Services also face lawsuits that allege racial bias in dealership markups of wholesale loans.
General Motors Acceptance Corp., Nissan Motor Acceptance Corp. and American Honda Finance Corp. have settled similar lawsuits.
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