Consumer Finance Insights
December 18, 2015

Auto Dealer-Lender and CFPB Settle Credit Reporting Allegations for $6.4 Million

On December 17, 2015, the CFPB announced a consent order and settlement with a Minnesota-based auto dealer and its affiliated financing company regarding their credit reporting practices in 15 states.  The consent order asserts that the companies violated the Fair Credit Reporting Act (FCRA) and the Consumer Financial Protection Act (CFPA) by allegedly furnishing to the major credit reporting agencies inaccurate information that consumers had unpaid balances, amounts past due, or their cars repossessed; deceiving consumers into believing they could build up “good credit” by using the auto dealer; and failing to have reasonable written policies and procedures to ensure the accuracy of consumers’ credit information.  This conduct “had the potential to harm” more than 84,000 consumers between January 2009 and September 2013 “by, for example, lowering their credit scores, hampering their abilities to obtain credit and make purchases, and hurting job-application prospects,” the consent order said.

Under the agreement, the companies will pay a civil penalty of $6,465,000 to the CFPB’s Civil Penalty Fund, cease representing that they will report “good credit,” identify and correct reporting inaccuracies, help affected consumers obtain a free credit report, and develop policies and procedures and implement an audit program to ensure the accurate reporting of consumers’ credit information.