The CFPB obtained a consent order from an auto finance company that allegedly distorted consumer credit records for years. The auto finance company, which according to the CFPB lends primarily to subprime borrowers, allegedly failed to fix known flaws in a computer system that was providing inaccurate information to credit reporting agencies. The CFPB believes this potentially harmed tens of thousands of its customers. As a result of the consent order the lender agreed to pay a $2.75 million fine, fix its errors, and change its business practices. The auto finance company did not admit or deny the allegations.
According to the CFPB the information reported incorrectly included:
- Wrong payments and overdue amounts: The lender allegedly provided inaccurate information about how much consumers were paying toward their debts. In many cases, the lender understated the amounts its customers were paying. When consumers made multiple payments within a single month, for example, the lender allegedly only reported one of the payments.
- Distorted dates: The lender allegedly inaccurately reported many of its customers’ “date of first delinquency,” which is the date on which a consumer first became late in paying back the loan. In most cases, the lender was reporting the date to be more recent than it actually was. The date an account first becomes delinquent matters because it determines how long a delinquency can appear on a consumer’s credit report. Inaccurate reporting of the age of a consumer’s delinquency can cause it to appear on the consumer’s credit report longer than is allowed by the FCRA.
- Inflated delinquencies: The lender allegedly substantially inflated the number of delinquencies for some customers when it reported customers’ last 24 months of consecutive payment activity. In one case, the lender allegedly reported that a consumer was delinquent eleven times, when in fact the consumer had only been delinquent twice.
- Mischaracterization of vehicle surrender: When loans reach a certain stage of delinquency, the lender had the option to repossess the car. Before that happens, though, consumers have the option to voluntarily surrender their vehicle and avoid a “repossession” showing up on their credit report. The lender allagedly told credit reporting agencies that some of its customers had their vehicles repossessed, when in fact those individuals had voluntarily surrendered their vehicles back to the lienholder.