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Lawsuit Charges Chrysler With Credit Redlining

Feb 3, 2003 | AP

A DaimlerChrysler subsidiary denied financing to creditworthy black Chicago applicants based on their race and where they lived, alleges a lawsuit filed today.

"Chrysler Finance has decided they don't want to finance cars purchased by black people," said Steve Berman, the lead attorney in the lawsuit filed in U.S. District Court in Chicago.

The lawsuit, filed on behalf of six Chicago-area residents but seeking class-action status, also charges that the financing subsidiary unlawfully repossessed vehicles from 70 black customers who did manage to get credit.

The lawsuit charges that Auburn Hills, Mich. based DaimlerChrysler and its subsidiary Chrysler Financial Company knew about and tolerated racist practices at its regional headquarters in Lisle.

The suit names as the defendant DailmerChrysler Services North America, LLC, doing business as Chrysler Financial Company, LLC, a subsidiary of Daimler Chrysler.

James Ryan, spokesman for DaimlerChrysler Services North America, said, "We have not seen or have been served with a copy of the lawsuit. We're outraged by the allegations made according to the story that went over the news wires and we deny each of them. We are confident that our credit evaluation process treats all applicants fairly and lawfully."

The lawsuit charges that Chrysler Financial's zone manager in Lisle bragged that he ran the most profitable zone in the company because of his racist policies, and that he frequently used offensive terms for black people during meetings with other Chrysler personnel.

According to the lawsuit, the six plaintiffs were denied credit by the Chrysler financing unit despite good scores on Chrysler's own credit rating system, which it contends the company equipped with an override to reject black applicants from certain neighborhoods.

"If you submitted your application to Chrysler Financial, no matter what you scored, if you were from an area they thought was a black area of a certain type, you got bounced," Berman said. "The practice of redlining is illegal in this country."

Redlining is the practice of denying credit or failing to provide services to people in certain areas based on the neighborhoods' ethnic makeup.

The lawsuit also charges that Chrysler offered worse terms to minority buyers than to white customers with equal credit scores.

The lawsuit seeks punitive damages as well as the difference between what the plaintiffs would have paid in interest under Chrysler's promotional financing offers and the higher rates they ended up paying in bank loans.

Ann Smith, spokeswoman for DaimlerChrysler in Auburn Hills, said DaimlerChrysler, the parent company of Daimler Chrysler Services North America, had not yet been served with the lawsuit.

Berman is a Seattle lawyer. Chicago attorneys representing the plaintiffs include Edward Vrdolyak, R. Eugene Pincham and William Hooks.

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