Firms Violate NY Fair Lending Law

By Staff Writer July 12, 2021

Adirondack Trust Company and Chemung Canal Trust Company will pay $275,000 and $350,000 in penalties, respectively, to New York State for violating the state’s fair lending law while engaged in indirect automobile lending. 

New York Superintendent of Financial Services Linda Lacewell announced her department’s investigation found that Adirondack Trust’s and Chemung Canal’s practices resulted in members of protected classes, namely race and/or ethnicity, paying higher interest rates than non-Hispanic white borrowers for their automobile loans, without regard to their creditworthiness. 

Adirondack Trust and Chemung Canal also permitted automobile dealers to charge a higher interest rate when they finalized the terms of the loans with the borrowers, according to Lacewell. The department’s investigation found that Adirondack Trust and Chemung Canal both failed to monitor automobile dealers that were charging members of protected classes, namely race and ethnicity, more in discretionary dealer markups than borrowers identified as non-Hispanic White. The department found that these disparities were not based on creditworthiness.

Adirondack Trust voluntarily discontinued its indirect automobile lending program as of Nov. 1, 2017.  In addition to paying a $275,000 penalty to New York State, Adirondack Trust agreed to provide restitution to eligible impacted borrowers and make a $50,000 contribution to local community development organizations.

As part of its agreement with the Department, in addition to paying a $350,000 penalty to New York State, Chemung Canal agreed to provide restitution to eligible impacted borrowers and undertake remediation efforts designed to increase Chemung’s monitoring of the dealers participating in its indirect automobile lending program and prevent discriminatory dealer markups in the future.

Both banks will also provide instructions, to be posted on their respective websites, as to how borrowers who believe they may have been impacted by a discriminatory dealer markup can make a claim for restitution.

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Last modified on Thursday, 15 July 2021 15:20