On December 17, 2015, the Consumer Financial Protection Bureau (“CFPB”) ordered auto dealer CarHop (and its affiliated financing company) to pay a $6.4 Million civil penalty for allegedly providing “damaging, inaccurate, consumer information to credit reporting companies.” Carhop was the subject of a CFPB investigation in which the CFPB alleged both parties violated the Fair Credit Reporting Act and the Consumer Financial Protection Act by specifically:
- Deceiving customers into believing they would be able to build and maintain good credit with CarHop
- Providing inaccurate repossession information
- Incorrectly reporting previous customers as still owing money
- Failure to have “reasonable written policies and procedures” to ensure credit information accuracy.
In addition to the monetary penalty (which will be allocated to the CFPB’s Civil Penalty Fund) , the companies will be required to cease misrepresenting that they will report “good credit” to the credit reporting agencies; that an audit program will be implemented and followed; provide credit reports to harmed customers; and correct any errors in credit reports.
The consent order can be found at: http://files.consumerfinance.gov/f/201512_cfpb_carhop-consent-order.pdf
For more information, please contact Jennifer Duncan at ResortCom International LLC at resortcom.com.
Consumer Financial Services Committee
ResortCom International LLC
Vice Chair of Communications
Hudson Cook LLP
Vice Chair of Programming
Severson & Werson
Vice Chair of Membership
Scott M. Pearson
Ballard Spahr LLP
Vice Chair of Legislation
Sheppard Mullin Richter & Hampton LLP