The Consumer Financial Protection Bureau says that some auto-dealership lenders are charging minorities above-market interest rates. The CFPB has warned it is cracking down on the practice known in the industry as "dealer markup," in which dealers and lending companies split the higher interest-rate charges. The bureau claims the practice is being used to discriminate against African Americans and Hispanics, in particular.

The CFPB's recent review of the auto-loan industry marks the first time a federal regulatory agency has explored the issue of discriminatory practices in the industry. The bureau is expected to begin targeting lenders for violations of laws relating to lending discrimination. "We expect that there will be fair-lending enforcement actions in this area sometime this year," said Ballard Spahr partner Christopher J. Willis.

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Consumer Financial Services