First, the Consumer Financial Protection Bureau and the U.S. Department of Justice delivered notices to Toyota Motor Credit Corp., alleging discriminatory practices regarding vehicle financing.
Now, American Honda Finance revealed it also received the same allegations from these federal regulators.
In documents filed with the Securities and Exchange Commission on Tuesday, officials from the CFPB and DOJ sent a letter to Honda’s captive finance company saying they have authorized enforcement actions alleging discrimination in automobile loan pricing to certain borrowers by dealers and alleging the loan pricing disparities were caused by AHFC’s business practices related to dealers.
AHFC officials added that they also have been informed that the agencies may defer pursuit of this litigation if the captive “works with the agencies to seek a voluntary resolution to these allegations.
“The agencies have informed AHFC that they are seeking monetary relief and implementation of changes to AHFC’s pricing practices and policies, which changes could affect AHFC’s business,” the company said in its SEC filing signed by Paul Honda, the captive’s vice president and assistant secretary.
“AHFC intends to continue to cooperate with the agencies to find a mutually agreeable resolution,” Honda added.
Just like Toyota’s captive arm, American Honda Finance indicated that it was previously contacted by the CFPB and DOJ regarding the agencies’ review of pricing practices by dealers originating retail installment sale contracts for vehicles.
“Their request for information and the ongoing review was to determine if pricing practices of dealers originating retail installment sale contracts for automobiles resulted in discriminatory pricing of these loans to certain borrowers in violation of applicable laws,” Honda’s captive said. “AHFC has voluntarily provided the information requested to date and cooperated with the agencies’ investigation.”
And just like Toyota Motor Credit, American Honda Finance currently is one of the top 20 market share holders. According to third-quarter data from Experian Automotive, AHFC ranked No. 7, holding 2.54 percent of the market.
Furthermore, Honda is extremely active in the leasing market as Experian indicated three of the automakers models — the Civic, Accord and CRV — led the way in market share for the most new-vehicle leases in Q3.
SubPrime Auto Finance News recapped Toyota’s letter acknowledgement earlier this week.