More than a year after American Honda Finance Corp. settled with regulators for potentially discriminatory auto lending, the settlement administrator is ready to begin sending eligibility forms to customers who may have been affected.
The forms are scheduled to go out within the next few days, according to a blog post on the Consumer Financial Protection Bureau web site, consumerfinance.gov.
In July 2015, American Honda Finance Corp., Honda’s captive finance arm, agreed to pay $25 million to settle CFPB and Justice Department discrimination claims.
The bulk of the settlement funds, $24 million, will be paid to customers who potentially were overcharged between Jan.1, 2011, and July 14, 2015. The remaining $1 million will be spent on consumer education programs.
As part of the settlement, the captive also agreed to cap dealer reserve -- the retail margin dealerships make for arranging an auto loan -- at 1 percentage point on loans longer than 60 months and 1.25 percentage points on loans of 60 months or fewer.
Borrowers will soon receive packets that identify the minimum amount of money they may be eligible for, but the actual payment amount may be higher, depending on the number of borrowers who participate in the settlement, Patrice Ficklin, fair lending director for the CFPB, said in a blog post on the CFPB’s website.
To receive a payment, customers must submit required forms by mail, email or online by Jan. 31, 2017.
If borrowers believe they are eligible but do not receive a participation packet by Oct. 17, they can fill out a claim eligibility form and submit it to the settlement administrator or call the settlement administrator at 855-891-9278.
The claim eligibility form says that the customer or at least one co-buyer must be African-American, Black, Hispanic, Latino, of Spanish origin, Asian, Native Hawaiian or other Pacific Islander. The customer must have also purchased a vehicle financed by American Honda Finance between Jan. 1, 2011, and July 14, 2015.
The claim eligibility form is available online in English and Spanish.
The CFPB and Department of Justice announced a similar settlement with Ally Financial in 2013 and with Toyota Motor Credit Corp. this year. Ally’s settlement administrator began contacting potentially eligible customers in June 2015. The CFPB has not yet said when a settlement administrator will contact Toyota Financial Services borrowers who may have been affected.