Honda Financial Services Customer Service Settlement

honda financial services customer service to consumers who buy or lease a new or pre-owned Honda or Acura vehicle. The company also offers motorcycles, power equipment and parts. Its customers include individuals, small businesses and commercial fleets. Honda Financial Services is a wholly owned subsidiary of American Honda Motor Company.

The Department of Justice and the Consumer Financial Protection Bureau have announced a groundbreaking settlement with American Honda Finance Corporation to end its discriminatory practices in auto lending. The settlement resolves claims that Honda violated the Equal Credit Opportunity Act by allowing car dealers to charge African-American, Hispanic, and Asian and Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers on the same auto loans, without regard to their actual creditworthiness. The disparate pricing and compensation structure obligated thousands of borrowers, on average, to pay $150 to $250 more for their auto loans than they would have had to pay had Honda not engaged in the discrimination. Under the terms of the settlement, Honda will pay $24 million to compensate victims of its past misconduct and will commit to significant changes to its pricing and compensation structures moving forward. An administrator will be hired to contact and distribute funds to victims, and Honda will regularly report to the Department and the CFPB on its victim compensation efforts. The settlement also requires Honda to improve its monitoring and compliance systems. The company has agreed to significantly limit dealer markup, the margin with which it allows dealers to vary a borrower’s interest rate from its initial risk-based price set based on objective credit-related factors.