All Banking Law, All in One Place. Bloomberg Law: Banking is the comprehensive research solution that powers your practice with access to integrated banking-related legal news, analysis,...
By Jeff Bater
Dec. 17 — A car dealer and its financing arm agreed to pay a $6.4 million fine to the Consumer Financial Protection Bureau (CFPB) for allegedly providing inaccurate information to credit reporting companies.
The CFPB announced an enforcement action against CarHop and its affiliated financing company, Universal Acceptance Corporation.
The bureau alleged CarHop and its affiliate failed to provide accurate, positive credit information that it promised consumers it would supply to credit reporting companies. A CFPB investigation found the companies inaccurately reported information for more than 84,000 accounts on “a widespread and systemic basis,” the agency said Dec. 17.
“Many consumers went to CarHop because they needed transportation and wanted to build up a good record of paying their bills,” CFPB Director Richard Cordray said in a news release. “But CarHop and Universal Acceptance Corporation thwarted those expectations by inaccurately furnishing negative credit information. The CFPB will not stand for companies whose sloppy actions jeopardize consumers’ credit.”
The CFPB found that CarHop and Universal Acceptance violated the Fair Credit Reporting Act. The bureau alleged the companies deceived consumers into believing they could build up good credit with CarHop.
As part of its marketing and sales practices, CarHop represented in writing to consumers that it reports “good credit” to the credit reporting companies, according to the CFPB. “CarHop also emphasized to consumers its part in helping them build and maintain good credit,” the bureau said in its news release. “This appealed to consumers trying to build up their credit profiles with a history of on-time payments. But the company, through Universal Acceptance Corporation, failed to furnish certain positive information, including information that would support ‘good credit,' for tens of thousands of consumers.”
The companies were also alleged to have provided inaccurate repossession information, incorrectly reported previous customers as still owing money, and failed to have reasonable written policies and procedures to ensure the accuracy of consumers’ credit information.
The companies settled without admitting or denying any of the findings of fact or conclusions of law. CarHop is headquartered in Minnesota, with about 50 retail locations in 15 states. Universal Acceptance, on behalf of CarHop, furnishes consumer account information to the three major consumer reporting companies monthly.
“We have agreed to this settlement, under which we have not admitted to the CFPB's allegations, to move beyond the distraction of the investigation started in May of 2012,” CarHop said in a statement posted on its website. “Although the CFPB has made a number of allegations, it did not find that any consumer is entitled to any damages.
“CarHop/UAC strives to comply with all applicable laws and regulations and provide exemplary service to our customers,” the company said. “Over the last several years and prior to the initiation of the CFPB investigation, we had taken and have continued to take steps to positively enhance our customers’ experience. We look forward to an ongoing relationship with the CFPB and hope to continue our constructive dialogue to improve our customer service and compliance practices in the years ahead.”
Credit reporting is an area the CFPB has addressed in the past.
For instance, the bureau announced a settlement earlier in December with a credit reporting company accused of mishandling consumer information, ordering the firm to improve the way it investigates disputes and to pay an $8 million fine (233 BBD, 12/4/15).
In 2014, the CFPB accused an auto finance company of distorting borrowers' credit reports and said it must pay a $2.75 million fine and fix any inaccuracies (162 BBD, 8/21/14).
In its latest regulatory agenda, the CFPB signaled that, in the future, there was the potential for a rulemaking to address important issues related to credit reporting (225 BBD, 11/23/15).
To contact the reporter on this story: Jeff Bater in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Seth Stern at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)