CFPB Warns Ally Financial Over Auto-Dealer Practices -- Filing

   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 [e-mail]

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