Report Finding Discrimination in Auto Loan Markups Leads to New Filing in California Court Case

SAN FRANCISCO--July 27, 2004--In response to a new report on discriminatory auto loan markups by American Honda Finance Corporation, Bill Lann Lee, the former Assistant Attorney General for Civil Rights and a partner at Lieff Cabraser Heimann & Bernstein, announced,

"We are submitting this report to the court in our pending case against Honda on behalf of Hispanic and African American car buyers.

"While other lenders are moving to limit dealer subjectivity in transactions, Honda's lending policies leave unchecked the deliberate and unconscious biases of dealers. Honda Finance is out of step. We want the court to be aware of this," Lee said.

The class action lawsuit, Pakeman v. American Honda Finance Corporation, was filed in 2003 in Alameda County Superior Court by Lieff Cabraser Heimann & Bernstein, the Lawyers' Committee for Civil Rights, Goldstein Demchak Baller Borgen & Dardarian and Antonio M. Lawson, of Lawson Law Offices in Oakland.

The report, prepared by Dr. Mark Cohen of Vanderbilt University, is based on examination of records of 383,652 American Honda Finance Corporation customers over the period June 1999 to April 2003. Dr. Cohen's study shows that Honda has subjected both its African American and Hispanic customers to systemic discrimination through uncontrolled dealer discretion in setting markups, a differential markup structure and discriminatory tier bumping. The report analyzes Honda lending data disclosed in a discrimination lawsuit against the lender filed in Tennessee by the National Consumer Law Center and several law firms. The full report is available under the heading AFHC at www.nclc.org.

Some key findings of Dr. Cohen's report: African-American borrowers on average pay more than two times the amount in subjective markup compared to whites: $557 versus $227, a difference of $330. Excluding contracts booked under special zero markup programs, African-American borrowers are charged on average $1,108 compared to only $698 for whites, a difference of $410. The average markup is $858 for Hispanic borrowers, compared to $667 for white customers.

In Pakeman, the African American and Hispanic car buyers in California challenge alleged discrimination in finance charges on loans for new and used motor vehicle purchases and leases. Today's amended complaint alleges that American Honda Finance Corporation charges African Americans and Hispanics a higher markup than white car buyers with similar credit ratings.

According to Lee, "No legitimate credit reasons exist for this markup, and it has a discriminatory impact on African American and Hispanic customers."

To learn more about the case, Pakeman v. American Honda Finance Corp., Case No. RG 03088920, and for consumers to report their experiences, please visit http://www.lieffcabraser.com/auto-loan-discrimination.htm.

In addition to Lieff Cabraser Heimann & Bernstein and the Lawyers' Committee for Civil Rights, the Pakeman plaintiffs are also represented by the Oakland-based law firm Goldstein Demchak Baller Borgen & Dardarian and by Antonio M. Lawson, of Lawson Law Offices in Oakland.