Auto loan company accused of bias

INDIANAPOLIS - An auto loan company has been accused of overcharging minorities for interest on their cars in two federal lawsuits filed in four states and the District of Columbia. <br> <br> The lawsuits, which seek class-action status for thousands of Hispanic and black customers, were filed in U.S. District Court in Indianapolis this week against Union Acceptance Corp. <br> <br> The company last year financed $1.6 billion in car loans for customers of 5,600 car dealerships, according to reports. Many loans originated in states with large minority populations, such as California, the lawsuits noted. <br> <br> The lawsuits were filed by attorneys in Indianapolis, Chicago, Doylestown, Pa., Minneapolis and Washington. <br> <br> Both suits alleged that Union Acceptance evaluated customers&#39; credit histories and other risk-related factors and then set risk-related interest rates at which it would buy the loans. <br> <br> However, the lawsuit says the company secretly encouraged dealers to set the interest rates even higher. <br> <br> ``This finance charge markup system, through which the dealer receives a kickback of profits from the artificially high rate of interest, is a predatory pricing scheme which has resulted and continues to result in unlawful racial discrimination against Hispanics,&#39;&#39; one lawsuit said. <br> <br> A Union Acceptance official, Rick Brown, on Thursday said that the company would not comment. <br> <br> However, in its annual report to federal authorities, the company described its pricing policy, saying dealers uniformly set interest rates an average of 0.9 percent higher than Union Acceptance&#39;s risk-related rate. <br> <br> ``In most states, this difference represents compensation to the dealership in the form of a dealer premium and is paid by the Company,&#39;&#39; the report stated. <br> <br> The lawsuits ask that the courts require Union Acceptance to end its pricing policy, train its employees and dealers on the requirements of the Equal Credit Opportunity Act and pay class members compensatory and punitive damages.

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