I’m surprised this wasn’t covered more here - Because what could possibly go wrong when you guess if somebody is a minority or not?
Let’s see if I get this straight - The CFPB makes a bank “guess” if somebody is a minority, based on things like their zip code and name. This is done to check for discriminatory lending practices. After all, banks can’t mark somebody as a minority on credit applications, so a guess is the best they can do for checking purposes. The CFPB then finds out that a certain bank and car dealers are charging a higher interest rate to a protected class of people based on their guesses.
Bing bang boom, $80 million fine time for that bank, in this case Ally. The CFPB then needs to distribute the proceeds from the fine to the people that were identified as being taken advantage of. However, that pesky guessing up front is coming back to bite them, as there are now people from non-protected classes (aka white people) getting sent letters to claim their settlement check, which is something greater than $150.