Ford’s Finance Unit Settles Bias Case

Ford Motor Co.’s auto finance unit agreed to pay $650,000 to settle complaints that it discriminated against unmarried couples applying for car loans, the Federal Trade Commission said.

Ford Motor Credit Co. said it will pay $500 on each of about 1,000 loans to compensate unmarried borrowers for higher interest rates they paid because of the disputed credit-rating practice.

The FTC accused Ford Motor Credit of violating the Equal Credit Opportunity Act between May 1994 and August 1995 by failing to consider the total income of unmarried couples who applied for credit to finance car purchases.

“While lenders can use a variety of factors to compute a consumer’s credit-worthiness, marital status isn’t one of them,” said Jodie Bernstein, head of the FTC’s consumer protection bureau.

“We have been working in full cooperating with the FTC,” said Ford Credit spokesman Walter Jennings. “We regret any inconvenience customers may have experienced.”

Jennings said that before the Federal Reserve Board clarified regulations in June 1995, it was unclear “whether the incomes of non-married co-buyers could be commingled” in determining credit-worthiness.

Unmarried couples whose combined incomes were not considered in rating their credit-worthiness “would have been put in a different risk tier” that would have led to higher interest payments, he said.

The FTC said the settlement is one of the largest ever involving credit discrimination. Last May, Franklin Acceptance Corp. of Philadelphia paid an $800,000 civil penalty to settle similar violations.

Shares of Ford closed down 14 cents at $50.31 on the New York Stock Exchange.