The Consumer Financial Protection Bureau in conjunction with the Department of Justice has found that Fifth Third Bank, the 9th largest indirect auto lender, has discriminated against African-American and Hispanic borrowers by marking up their car loans at higher rates.

As a result, the bank must pay $18 million in damages.

The federal agencies found that Fifth Third allowed the auto dealers it works with to charge a higher markup rate to African-American and Hispanic buyers than to buyers of other ethnicities. Marking up car loan rates is common practice, as it generates additional profit for the dealer while giving them the discretion to charge consumers different rates on car loans based on their creditworthiness.

Loan markups are restricted

Over the 5-year period the federal agencies reviewed, it was determined that Fifth Third allowed dealers a markup rate as high as 2.5%. It found that the lender’s policies specifically resulted in the 2 minority groups receiving higher markup rates than others without regard to their creditworthiness, resulting in an average of $200 more for those car loans.

As a result of the finding, Fifth Third must change its pricing and compensation system by reducing a dealer’s discretion to markup auto loan interest rates to only 1.25% above the buy rate for car loans with terms of 5 years or less and no more than 1 person for terms longer than 5 years. In addition, it must pay $18 million in damages to African-American and Hispanic borrowers who obtained loans between January 2010 and September 2015.

“This agreement shows that the indirect auto lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing,” says Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.

In addition to dealer markup, other fees could be wrapped into your car loan. Read: Don’t pay unnecessary dealer fees.

If you’re thinking of shopping for a car, first check your credit score for free at myBankrate.com.

Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.