WASHINGTON, D.C. – Seventeen consumer and civil rights advocacy groups sent a letter today to investor and auto dealer, Warren Buffett, urging him to help end discriminatory auto lending practices in this country.
In 2014, Mr. Buffett's Berkshire Hathaway purchased the largest privately-held auto dealership group in the nation, the Van Tuyl Group. The civil rights and consumer groups, which include several of the nation's oldest, largest, and most widely-known civil rights organizations, called Mr. Buffett's attention to the widely documented problem of "racially motivated and discriminatory auto dealer markups."
Eighty percent of the auto loans in the United States are arranged through dealers. When a dealer gets quoted a rate from a lender, the dealer has the discretion to add to that rate and keep some or all of the difference as compensation.
The letter explained that:
In the mid-1990s, a series of successful lawsuits were brought against the largest auto finance companies for alleged discrimination. The data from those cases showed that African American and Latino car buyers were more likely to have their interest rates marked up than similarly-situated white borrowers, and those who did, had their interest rates marked up more than white borrowers.
The letter cited reports and investigations by the New York Times and ABC's 20/20, and highlighted several recent settlements with auto lenders, including Ally Bank, Evergreen Bank, Honda Financial, and most recently, Toyota Motor Credit for violations of the Equal Credit Opportunity Act.
Mr. Buffett has been a public advocate of corporate social responsibility and the groups reminded him of his own words, “It takes twenty years to build a reputation and five minutes to ruin it.”
Toward the end of the letter, the groups asked Mr. Buffett to "join us in openly condemning these practices and help lead the way to a fair, open and transparent marketplace."
For more information, or to arrange an interview with a CRL expert, please contact Charlene Crowell at Charlene.Crowell@responsiblelending.org or 919-313-8523.