Lieff Cabraser and Goldstein Demchak Announce That Minority Car Buyers Have Filed Suits Against Major Auto Loan Companies for Racial Discrimination in Loan Finance Charges

    SAN FRANCISCO--April 10, 2003--At a press conference today, civil rights lawyers announced that nationwide class action complaints have been filed against American Honda Finance Corporation, the lender for the Honda Motor Company; WFS Financial, Inc., one of the nation's largest independent auto loan lenders; and Toyota Motor Credit Corporation, the lender for Toyota Motor Company. The suits were filed on behalf of African American and Latino car buyers who allege that the companies' discriminatory loan mark-ups violate state civil rights laws and business codes.
    Plaintiffs' counsel Bill Lann Lee, former Assistant Attorney General for Civil Rights at the U.S. Justice Department and a partner at Lieff Cabraser Heimann & Bernstein, LLP, said, "These cases involve core civil rights issues. The law does not permit discriminatory lending, and our suits aim to stop it."
    The lawsuits allege that each company has discriminated against African American and Latino auto buyers by charging them higher interest rates on loans for new and used cars, SUVs, pick up trucks and other vehicles than charged to white customers with similar credit ratings.
    "The discriminatory auto loan system has devastating effects on African Americans and Latinos," stated Plaintiffs' counsel Morris J. Baller of Goldstein, Demchak, Baller, Borgen & Dardarian. "These cases could save minority purchasers hundreds of dollars each and result in orders to repay minority purchasers millions of dollars."
    Plaintiffs' lawyers have set up a toll-free telephone number, 1-800-998-3469, and urged people to call if they feel that they may have been the victims of discriminatory lending practices in the automobile industry.

    How The Alleged Discriminatory Loan Practices Work

    According to the lawsuits, the auto finance industry uses a two-part formula when computing the interest rate offered on auto loans. The first part is known as the "buy rate." This interest rate is determined by a computerized credit rating system controlled by the lender and based strictly on credit and risk factors. The computerized system gives a minimum interest rate, called the "buy rate," to the dealer which constitutes the lender's authorization to give the customer the loan at that rate.
    The second part is known as the "mark-up," which can boost the final interest rate on the auto loan offered to the customer. The "mark-up" is up to the dealer, and has nothing to do with the customer's credit-worthiness or the cost of processing the loan. The "mark-up" is widely used to hike up the rate for African American and Latino customers, the lawsuits charge.
    Oren Sellstrom, of the Lawyers' Committee for Civil Rights of the San Francisco Bay Area, which also represents Plaintiffs, explained, "Our investigations show that a Latino or African American car buyer is much more likely to have to pay mark-up charges on top of his or her authorized buy rate than a white buyer. And, the average mark-up paid by black buyers was close to $1,000, while the average amount paid by whites was less than $500."

    Experiences Of The Plaintiffs

    Joaquin Andrade, an agricultural worker and father of three in Woodlake, California, was charged over $3,100 in interest on a loan of only $6,500 for a 1992 car. "The dealer just told me how much I would have to pay each month. I had no idea I was being charged 20 3/4% interest on my car loan and I had no idea that a mark-up on top of the loan rate was added," Andrade said.
    Michelle Thompson, an African American receptionist at the City of Oakland who lives in Antioch, CA, said that when she financed her car through WFS, "The amount of interest sounded high, but I really didn't have any choice because I needed to have a reliable new car. I recently discovered the mark-up. I want the money back for those extra charges - not just for myself, but for everyone else who was treated like me."

    Relief Sought

    The suits ask the court to bar these discriminatory lending practices in the future and to provide reimbursement for consumers charged discriminatory mark-ups in the past. The cases are filed under two California statutes: the Unruh Civil Rights Act, which prohibits discrimination in lending against persons on the basis of race, color, or national origin, and includes provision for award of damages, with a minimum of up to $4,000 per incident of discrimination, and the Unfair Competition Law, which prohibits businesses from engaging in illegal or unfair practices, and provides for restitution of money obtained through such practices.

    Consumer Inquiries

    The toll-free number, 1-800-998-3469, is available to both English and Spanish speakers and may be used confidentially and without charge to obtain information and assistance from the attorneys concerning these cases and the discrimination problems they raise. Customers can also visit www.lieffcabraser.com/auto-loan-discrimination.htm for more information and to contact the attorneys.

    About Plaintiffs' Counsel

    Lieff Cabraser Heimann & Bernstein, LLP, on the web at http://www.lieffcabraser.com, has a comprehensive and diverse practice that is unique among law firms that represent only plaintiffs. The firm's cases typically involve employment discrimination and unlawful employment practices, human rights, dangerous or defective products, securities and investment fraud, consumer fraud, environmental damage and toxic exposures and antitrust. Working with Bill Lann Lee on the litigation at Lieff Cabraser is attorney Enrique Martinez. A copy of this press release can be found at http://www.lieffcabraser.com/auto-loan-press.htm
    Goldstein, Demchak, Baller, Borgen & Dardarian, formerly known as Saperstein, Goldstein, Demchak and Baller, is one of the largest public interest law firms in the country. It has handled many successful employment discrimination class actions and successfully resolved more large class actions for minority and female workers than any other private firm in the nation. In addition to Morris J. Baller, Linda M. Dardarian and Joseph E. Jaramillo of Goldstein Demchak are working on the case. The law firm's website is at http://www.gdblegal.com.
    The Lawyers' Committee for Civil Rights of the San Francisco Bay Area is a civil rights and legal services organization dedicated to advancing the rights of people of color, low-income people, immigrants and refugees, women, children and other under-represented groups and individuals. Since its inception in 1968, The Lawyers' Committee has been actively involved in combating discrimination.
    Other Plaintiffs' counsel include Barry Litt of Litt and Associates in Los Angeles, California; Kevin Reed and Johanna Shargel of Strumwasser & Woocher in Los Angeles, California; Antonio M. Lawson of Lawson Law Offices in Oakland, California; and Richard Dorman of Cunningham, Bounds, Yance, Crowder & Brown, LLC in Mobile, Alabama.