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Bank of America reported Friday that it had lost data tapes containing financial information for federal employees. Media sources throughout the country put the total number of individuals impacted at 1.2 million, but the company’s press release referred only to “a small number of computer data tapes” and not mentioning the number of people affected.

WNCT television in Greenville, NC called Bank of America and confirmed through a spokesman that the bank would be responsible for any damages caused by the lost information. The Associated Press, meanwhile, reports that Sen. Patrick Leahy (D-Vt), who has been calling for hearings regarding ChoicePoint’s release of 140,000 consumers’ records, was among those federal employees whose records have been lost by Bank of America.

Investors did not seem troubled by the events on Monday, inching the bank’s stock down 14 cents per share to close at $46.55.

Posted under Privacy

Bank of America and J.P. Morgan Chase & Co. are reportedly in talks to end class action suits against their banks for allegedly allowing auto dealers to charge black consumers higher automobile interest rates than white consumers. The Associated Press this week reached spokespeople at both companies who confirmed that talks about the issue were taking place.

At issue is an industry wide practice known as “dealer markup”. Consumers who arrange financing through an automobile dealer are not necessarily given the lowest rate possible. The Detroit Free Press quoted an industry spokesperson in December saying, “”The fact that a dealer is compensated for obtaining financing should come as no surprise.”

But consumer groups have been surprised at how a consumer’s race can influence the amount of extra “compensation” a dealer attempts to charge.

Various studies have shown that consumers using GMAC, American Honda Finance Corporation and Ford Motor Credut paid different rates, and those rates correlated with race. Other studies have drawn similar correlations to gender. In a Vanderbilt University study of more than 300,000 transactions over four years, 43% of black consumers were charged a higher rate versus 22% of white consumers. The additional amount charged over the life of the loan also varied — from an average of $557 for black consumers to $227 for white consumers. Another study showed that black GMAC consumers spent an additional $350 over the life of a loan than white consumers.

“This is one of automotive retail’s dirty little secrets, ” says Consumer Help Web president Joan Bounacos. “Too many transactions have taken place for this to be a statistical glitch. Dealers and lenders were clearly charging African-American consumers more than they charged Caucasian consumers. That is unacceptable in 2004 America.”

The National Auto Dealers Association (NADA), the auto retail industry’s trade group, has continually defended the practice of charging consumers higher rates, but has also worked on education efforts to ensure compliance with the law. Those efforts include a training video offered for sale to dealers on the group’s web site for $169.

While denying any discrimination, both banks are apparently in talks now to cap the total markup dealers can charge to any consumer. Lender GMAC reduced its cap 2.5 percentage points in 2004.

Posted under Customer Service