Two banks in New York State, one with branches in Central New York, have to pay over $600,000 for violating the state’s fair lending law.
Minorities wound up paying more for auto loans with the bank’s lending practices, according to the state Department of Financial Services.
Adirondack Trust Co., based out of Saratoga Springs, will pay $275,000 and Chemung Canal Trust Co., based out of Elmira, will pay $350,000.
Chemung Canal has branches located throughout the Southern Tier, Finger Lakes and areas of Central New York. Adirondack Trust has locations throughout the Capital Region.
The investigation was looking into the bank’s practices with auto lenders and results showed that car dealers were charging minorities a higher interest rate than they were whites. The differences were not based credit histories or risks of defaulting on their loans.
Evidence did not show that banks were aware of this happening, but their policies allowed minority borrowers to be treated unfairly.
Banks cooperated with the investigation and in addition to paying the penalties, Chemung Canal is also paying restitution to its borrowers as well as monitoring car dealers it works with for the future.
Adirondack Trust is also paying restitution as well as making a $50,000 contribution to organizations for community development. They discontinued the lending business that was being investigated.
Instructions to file restitution claims will be filed on their websites.