At a time when numerous large corporations have been expressing support for the Black Lives Matter movement, it is important not to forget that big business has played a role in perpetuating systemic racism and widening the racial wealth gap.
This reality became clearer for me while I was collecting a new category of data for Violation Tracker: class-action lawsuits brought against financial services corporations engaging in discriminatory practices against their customers.
I was able to identify a total of 30 cases in which banks, insurance carriers and consumer finance companies paid a total of $400 million in settlements over the past two decades to resolve allegations that they charged higher premiums or interest rates to minority customers.
These private lawsuits are in addition to dozens of similar cases already in Violation Tracker that were brought by the Justice Department and state attorneys general during the same time period.
A wave of this litigation came in the early 2000s, when all the major automobile financing companies—including subsidiaries of carmakers such as Ford, General Motors, Toyota, and Honda—agreed to settle allegations that they allowed dealers to charge inflated interest rates on loans to African-American customers.
Subsequent years saw settlements with major insurance companies such as John Hancock, which in 2009 agreed to pay $24 million to resolve allegations that for decades it sold only inferior policies to Black customers. As recently as 2018, Travelers Indemnity settled a suit alleging it engaged in racial discrimination by refusing to write commercial policies for landlords who rented to tenants using Section 8 vouchers.
Over the past decade, major banks have faced private discrimination lawsuits concerning their mortgage lending practices. The defendant in four of these cases was Wells Fargo, which has paid more than $28 million in settlements. These include a case resolved just last year in which the City of Philadelphia had sued the bank on behalf of minority residents it allegedly steered to mortgages that were riskier and more expensive than those offered to similarly situated white homebuyers.
Discriminatory practices such as redlining began many decades ago. What the consumer civil rights lawsuits now documented in Violation Tracker show is that these injustices are not entirely a phenomenon of the distant past. The financial services sector has more work to do to ensure that their customers of color are treated equitably.
Note: with the addition of these lawsuits and other recent cases, Violation Tracker now contains a total of 438,000 entries involving $633 billion in fines and settlements.