Skip to main content
Press Release

Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by Fifth Third Bank

For Immediate Release
Office of Public Affairs

The Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced an $18 million settlement to resolve allegations that Fifth Third Bank (Fifth Third) engaged in a pattern or practice of discrimination against African-American and Hispanic borrowers in its indirect auto lending business.

The settlement, which is subject to court approval, includes compensation for African-American and Hispanic borrowers who were overcharged, and requires changes to the way that Fifth Third prices automobile loans.  Specifically, Fifth Third has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points, or 1.25 percent, for loans of 60 months or less, and to 100 basis points, or one percent, for loans greater than 60 months.

“We commend Fifth Third for its commitment to treating all of its customers fairly without regard to race or national origin and its leadership in agreeing to impose lower caps on discretionary markups,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “This agreement shows that the indirect auto lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing.”

“Consumers deserve a level playing field when they enter the marketplace, especially when financing an automobile,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio.  “This settlement prevents discrimination in setting the price for auto loans.”

“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said CFPB Director Richard Cordray.  “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination."

The coordinated investigations by the department and the CFPB that preceded today’s settlement determined Fifth Third’s previous system of subjective and unguided pricing discretion directly resulted in the bank’s qualified African-American and Hispanic borrowers paying more than qualified non-Hispanic white borrowers.  The department and CFPB anticipate that Fifth Third’s new caps on discretionary markups will substantially reduce or eliminate these disparities.

The investigation relates to what are called “indirect” auto loans,  because, rather than taking applications directly from consumers, the bank makes most of its auto loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Fifth Third.  Fifth Third’s previous business practice, like that of many other major auto lenders, allowed car dealers discretion to mark up a loan’s interest rate from the price Fifth Third initially sets based on the borrower’s objective credit-related factors.  Dealers received greater payments from Fifth Third for loans that included a higher interest rate markup.

The settlement resolves claims by the department and the CFPB that Fifth Third discriminated by charging thousands of African-American and Hispanic borrowers higher interest rates than non-Hispanic white borrowers.  The agencies claim that Fifth Third charged borrowers higher interest rates because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.  The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Hispanic victim was also obligated to pay over $200 more during the term of the loan because of discrimination.  The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending.  Fifth Third’s settlement with the Department of Justice, which is subject to court approval, was filed today in the U.S. District Court for the Southern District of Ohio in conjunction with the Department of Justice’s complaint.  Fifth Third resolved the CFPB’s claims by entering into a public administrative settlement.

The settlement also requires Fifth Third to improve its monitoring and compliance systems.  The settlement allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results.  The department commends Fifth Third for working cooperatively to reach an appropriate resolution of this case.

The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Fifth Third’s discrimination.  The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available.  Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.

The Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio and the CFPB are members of the Financial Fraud Enforcement Task Force.  President Obama established that interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit

The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division.  Since 2010, the Civil Rights Division has provided approximately $1.3 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA.  The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at

Updated November 8, 2016

Civil Rights
Press Release Number: 15-1185