The author of a study finding that African-American car buyers paid more in car loans than similarly situated white buyers claims the only factor that explains the difference is race.

Dr. Debby A. Lindsey, a business professor at Howard University, analyzed close to 15,000 loans from General Motors Acceptance Corporation (GMAC) and Nissan Motor Acceptance Corporation (NMAC).

"Credit worthiness is not even an issue because it is already factored into the buy rate. The only issue is whether the finance companies' policy of allowing markups beyond the buy rate has an adverse effect on African Americans and I concluded that it does," Dr. Lindsey said.

Two federal lawsuits charge the discrimination affected hundreds of thousands of people who financed automobiles over the past 11 years. Lawyers in the class action cases are seeking money back and a change in the auto loan companies' practices.

The suits claim that car dealers were encouraged by GMAC and NMAC, unknown to most consumers, to inflate the costs of car loans for customers they thought would pay higher rates. The car finance companies and the dealerships then split the additional revenue. The plaintiffs' lawyers say it was that policy which resulted in discrimination with blacks typically paying about 50 percent more in dealer markup than whites. The complaints further allege that the finance companies should have foreseen the results and immediately ended the practice as soon as discrimination became apparent.

Federal civil rights law allows for penalties against companies whose policies lead to discriminatory lending or pricing, even if that discrimination is inadvertent and if race is not directly referred to in the policy.

"The record shows that discrimination is bad or even worse for African American car buyers with perfect credit," said Gary Klein, senior attorney with The National Consumer Law Center in Boston, one of several lawyers and law firms involved in the case. "NMAC and GMAC may not know the race of their borrowers, but they engage dealers to arrange the loan terms, and those dealers definitely do know the borrowers' race. We contend that the law makes NMAC and GMAC responsible for all the terms of the loan including those arranged by the dealers."

"Markup charges shouldn't be secret," Klein said. "The secrecy encourages dealers to set up loans for consumers not with the lender that offers the best rates, but rather with the lender that kicks back the most markup."

The suits against GMAC, concerning Tennessee car buyers, and the NMAC suit, concerning buyers across the country, are both pending in the U.S. District Court for the Middle District in Tennessee, which sits in Nashville. Both cases were certified in August of this year as class actions. The federal Department of Justice appeared in court in support of the plaintiffs' position. The cases were filed two years ago under seal, but were recently unsealed under pressure from national media.

ABC News' 20/20 featured a report on the investigation on Oct. 27.

Presently, the NMAC case is scheduled for trial in September 2001, and the GMAC case in February 2002.