Ally Financial is starting to pay back $80 million to minority borrowers that the federal government found were victims of discrimination as a result of the companies’ indirect auto lending business.

The Consumer Financial Protection Bureau and the Department of Justice charged that Ally Financial and Ally Bank allowed mark-ups on interest rates at partnering dealerships that affected more than 235,000 minority borrowers from April 2011 through December 2013. The companies settled the charges in what is believed to be the largest auto loan discrimination settlement with federal authorities in history. 

Under the agreement, the companies will not only return $80 million to consumers but also pay an additional $18 million in penalties.

In addition to paying the fines, Ally is required to put in place a compliance program to prevent discrimination that includes performing a portfolio-wide analysis of pricing data for disparities at dealerships that can also be checked by the CFPB and Justice Department.  

"Discrimination is a serious issue across every consumer credit market," said CFPB Director Richard Cordray. "We are returning $80 million to hard-working consumers who paid more for their cars or trucks based on their race or national origin. We look forward to working closely with the Justice Department and Ally to make sure this serious issue will be addressed appropriately in the years ahead as well.”

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