The prospect of computer hackers taking control of your car is only the latest of the undue risks of car ownership.  There are also undue financial risks.  Prominent among them is predatory and discriminatory auto lending, specifically abusive interest rate markups targeted on racial minorities.  On Wednesday, the House Financial Services Committee passed a bill that, if enacted, would roll back efforts by the Consumer Financial Protection Bureau to stop predation and discrimination in car loans. The bill would nullify auto-loan guidelines issued by the bureau in 2013 that spelled out lenders’ obligations and liability under federal lending law. It would also require the bureau to go through a cumbersome process whenever it issued future auto-lending guidelines for nonbank auto lenders — including finance companies that are owned by carmakers — which make up a huge part of the auto-loan market.  Republican-dominated House committees routinely pass awful bills that please their corporate constituents but go nowhere. The committee vote on this bill, however, was 47 to 10, with 13 Democrats joining all of the Republican members in voting yes. Overall, the bill has 124 co-sponsors, including 55 Democrats. The level of support reflects the power of auto dealers, who are often among the most prominent businesspeople in any given congressional district and who do not want scrutiny of their lending practices.  The bill’s supporters say it would make needed changes to regulatory procedures. What it really would do is condone overcharging and discrimination in auto lending.  Another risk drivers face is being charged more for car insurance because they are not married, despite the flimsiness of the alleged connection between marriage and safe driving.  Research issued this week by the Consumer Federation of America compared the premiums charged by six major insurers in 10 cities by marital status – single, single with child, separated, divorced, widowed, domestic partner and married. Some findings:  In addition, the report found baffling increases in premiums for some women who were widowed. It also found evidence that price difference between married and unmarried drivers occurs at various age levels.  The report calls on state regulators to investigate insurers’ use of marital status in auto insurance pricing.  The not unreasonable hunch is that marital status is largely unconnected to risk and thus should not be much of a factor in the pricing of auto insurance.  Geico and Liberty did not respond to calls for comment. A spokesman for Nationwide said that the report’s findings were “overgeneralized” and that the company does not have different prices based “solely” on whether a driver is widowed or married. The response is off point. The report does not say that marital status is the only determinant of price; rather, it isolates the impact of marital status on premiums by holding constant other factors that affect price. Farmers and Progressive referred inquiries to the Insurance Information Institute, an industry organization, which said that “marital discounts” have long been accepted by regulators and that consumers concerned about price should shop around for more suitable policies.  Car buyers need the bolstered enforcement of legal standards that the consumer bureau is trying to provide. Car owners need state insurance regulators to vigilantly monitor the pricing of policies. More consumer protection is likely to mean less profit for lenders and insurers, but to the extent that profits are based on predation and discrimination, they should be squelched. Equally important, the loss for lenders and insurers would be a gain for consumers, who are the true engine of the economy and, not incidentally, precisely the people that federal lending law and state insurance law are supposed to protect.
Today’s drivers must contend with discriminatory lending practices and car insurance that may go up if they’re widowed.