By Andrew R. Johnson
Ally Financial Inc. warned Tuesday of increased scrutiny by the
U.S. consumer-finance watchdog over auto-lending practices.
The Detroit-based company disclosed in a regulatory filing that
the Consumer Financial Protection Bureau has told Ally it hasn't
taken adequate steps to prevent auto dealers from violating
antidiscrimination lending laws.
"The staff of the CFPB has recently advised us that they believe
we have an obligation to prevent independent automotive dealers
with which we do business from engaging in certain retail financing
practices that the CFPB believes violate the anti-discrimination
provisions of the Equal Credit Opportunity Act, and that we have
failed to fulfill this obligation," Ally said in the filing.
Ally had previously disclosed that the agency was investigating
its retail-financing practices. The added disclosure follows
warnings by the CFPB that auto lenders will be held responsible for
certain practices by dealerships.
In March, the CFPB told lenders they must do more to ensure that
car loans comply with laws barring discrimination against
minorities and women. The agency has zeroed in on a practice in
which auto dealers mark up interest rates charged on loans to
consumers, which regulators have said may unfairly hurt women and
minorities.
Ally said it is in discussions with the CFPB regarding its
investigation and it could face penalties and business-practice
changes as a result.
A spokeswoman for the CFPB declined to comment.
-Alan Zibel contributed to this story.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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