Evidence of subconscious racism shows up at Honda

Thousands of black, Latino, Asian and Pacific Islander Honda buyers will be getting rebate checks in the coming months after the car maker discovered dealers were boosting interest rates for minorities.

American Honda Finance Corp. reached a $24 million settlement with federal prosecutors after statistics showed that dealers consistently charged minorities more for loans. Minorities paid an average of $250 more over the life of a loan than a white buyer from 2011 to this summer.

What’s interesting about the case is that Honda and the dealers claim this was not on purpose. There was no formal policy to charge minorities with the same credit scores more than whites. Honda officials swore there was no intent.

So how and why did it happen? To me, it sounds like microaggression.

Sociologists who study racism came up with the term to describe the little, subconscious things people do that reveal a bias. The classic example is the white woman who clutches her purse a little more tightly when she see a black man, or the host at a restaurant who consistently gives Latin couples the worst table. Or the hiring manager who sees an applicant’s name that is Asian and automatically draws some conclusions about them.

These people will insist they are not racist and probably not even realize what they are doing until someone points it out to them. Even then, they have a hard time admitting that maybe, just maybe, they need to think about their prejudices.

In the Honda case, the company allowed dealers to adjust the interest rates on loans by as much as 2.25 percentage points when striking a deal. Honda sales staff are predominately white and they probably felt more comfortable talking to white customers. They probably talked about family or sports during the negotiation. A good salesperson knows how to form a relationship with a customer.

What the sales person probably wasn’t paying attention to was the bond they were forming based on physical and social commonalities. It’s perfectly normal.

That’s why when the computer produced an interest rate, the sales person was more likely to give the white person a greater discount. The minority ended up paying more because the bond was not there. The only way to catch these microaggressions is through statistical analysis, and that’s what happened in this case.

Honda has promised to make dealers more aware of this dynamic. The company also promised to change the way interest rates are set. That’s the right response. And its one that every business should learn from.

These people will insist they are not racist and probably not even realize what they are doing until someone points it out to them.
July 15, 2015
Houston Chronicle