Not long after taking action against American Honda Finance Corporation under the disparate impact doctrine for allegedly discriminatory auto loan pricing, the CFPB has struck again—this time reportedly referring Santander Consumer USA, Inc. to the DOJ based on the same theory. See Santander Consumer USA Holdings Inc., Form 10-Q, 8/10/2015, page 33. Like Honda and Ally Financial, Santander is alleged to have engaged in discriminatory auto loan pricing stemming from the company’s discretionary pricing and dealer compensation practices, i.e., allowing auto dealers to mark up its risk-based interest rate. Interestingly, however, unlike Honda and Ally, the Bureau has also apparently taken issue with the way Santander treats certain forms of income in its auto loan underwriting.
It’s important to note that a CFPB referral to the DOJ is not necessarily an indication that either the Bureau or the Department will be taking formal public enforcement action, as the matter could be addressed through the Bureau’s confidential supervisory process. That said, a referral does suggest that the CFPB believes an ECOA violation occurred and apparently was not convinced otherwise through its PARR and ARC processes.