The Federal Trade Commission has negotiated an agreement with the Ford Motor Credit Company (Ford Credit), the auto financing subsidiary of Ford Motor Company, under which Ford Credit will pay $650,000, covering consumer redress and the costs to administer such redress, for alleged violations of the Equal Credit Opportunity Act (ECOA). According to the FTC, for a 15-month period from May 1994 to August 1995, Ford Credit discriminated against certain credit applicants by failing to aggregate the income of unmarried joint applicants, while combining incomes for applicants who were married. As a result, the FTC alleged, many unmarried joint applicants were offered credit on less favorable terms than married applicants. Ford Credit is a Delaware corporation based in Dearborn, Michigan.
The $650,000 is among the largest settlements ever obtained by the Commission in an ECOA-related matter; in May of this year Franklin Acceptance Corporation, a Philadelphia-based finance company, paid an $800,000 civil penalty for similar alleged ECOA violations, as well as Fair Credit Reporting Act violations. Under the terms of the proposed settlement, in addition to providing consumer redress, Ford Credit will be prohibited from engaging in similar ECOA violations in the future.
"Millions of consumers use credit," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, "and the Equal Credit Opportunity Act guarantees that they are given an equal chance to get it. While lenders can use a variety of factors to compute a consumer's creditworthiness, marital status isn't one of them. This settlement tells lenders and would-be borrowers that credit discrimination won't be tolerated."
The ECOA and its implementing Regulation B prohibit discrimination against an applicant for credit on the basis of race, color, religion, national origin, sex, marital status, or the fact that an applicant's income is derived from public assistance. Regulation B specifically prohibits discounting or refusing to consider income on the basis of marital status.
The FTC's complaint detailing the charges against Ford Credit alleges that on numerous occasions between May 1994 and August 1995 the company violated the ECOA by discriminating against credit applicants by failing to aggregate the income of unmarried joint applicants while aggregating the income of married joint applicants. Under the terms of the agreement reached with the Commission, Ford Credit will pay $650,000 to compensate those credit applicants who were adversely affected during the time in question and return an eligibility claim form. In addition, the company will be permanently enjoined from discriminating against an applicant on the basis of marital status with respect to any aspect of a credit transaction in violation of the ECOA and Regulation B.
The Commission vote to file the complaints and approve the settlement was 4-0. The complaint and consent decree were filed in the United States District Court for the Eastern District of Michigan on December 9, 1999.
NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.
Copies of the news release and legal documents related to this matter are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
FTC File No. 952-3149