DaimlerChrysler’s finance subsidiary DaimlerChrysler Services is facing a class-action lawsuit accusing it of denying credit to customers in the Chicago area based on race, and repossessing vehicles of customers living in predominantly black suburbs without justification or proper notification.

The suit, filed with the US District Court in Illinois by law firm Hagens-Berman on behalf of six black purchasers of Chrysler vehicles, claims Chrysler management systematically and intentionally denied low-interest vehicle financing to creditworthy blacks in two Chicago suburbs, based on the area in which they lived and the dealership they selected to purchase the car. The suit also contends that the practice still continues.

DaimlerChrysler Services spokesman James Ryan told just-auto on Thursday that the company had not yet been served with the suit and knew of it only through details of a press release distributed by the law firm.

 “DaimlerChrysler North America is outraged at these allegations,” Ryan said. “We neither condone or tolerate such behaviour within our organisation and are confident that our credit evaluation processes treat all applicants fairly and lawfully.”

Ryan added that the company was waiting to be served with the suit and would then look into the complaints and allegations made.

According to the suit, details of which were sent to the news media by a national press release distribution company, Chrysler allegedly uses an automated computer program called the ACE (Automated Credit Evaluation) System, which is designed to give so-called ‘colour blind’, objective credit evaluations to customers applying for financing from Chrysler.

The complaint claims that Chrysler modified the ACE System software with a “disabling switch” that rerouted all applications from particular dealerships for subjective review by an employee at Chrysler’s regional headquarters. The suit claims there are two dealerships in which virtually every credit application submitted by a black customer was denied financing regardless of credit scores.

Jerrell Coburn, one of the six named plaintiffs, received a score of 656 on the Empirica scale, a system used by one of the three largest credit-reporting bureaus in the United States, and a score that should have qualified him for Chrysler promotional financing, according to the complaint. After Chrysler denied his credit application, Coburn received financing from another financial institution at a much higher interest rate, the suit claims.

The suit also claims Chrysler has denied financing to creditworthy black applicants at two Chicago-area dealerships since at least April 2001. In September of 2002, Chrysler is alleged to have begun denying all credit applications from the Marquette dealership, and continues to deny financing to the dealership, the complaint states.

Another named plaintiff, Vanessa Dampeer, is said to have had a similar experience; finding out Chrysler refused to finance her purchase only after taking delivery of her new Sebring. “Overnight, we went from zero percent financing to 14%,” Dampeer reportedly said.

Hagens Berman managing partner Steve Berman believes that other dealerships around the country suffer from ‘redlining’ by Chrysler. “These extreme comments and policies existed at Chrysler for too long to simply be an anomaly,” he said.

The complaint also charges that when 70 Marquette dealership customers obtained financing, Chrysler renounced the executed financing agreements as ‘nigger deals,’ and unlawfully repossessed all or some of the 70 vehicles.

According to the complaint, many of the vehicles were repossessed from owners who never missed a payment or were only marginally late with a payment.