Business Law

$6.4 Million Penalty for “Buy-Here, Pay Here” Auto Dealer Called Carhop

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

Chair
Jennifer Duncan  
ResortCom International LLC
jduncan@resortcom.com

Vice Chair of Communications 
Alicia Tortarolo
Hudson Cook LLP
atortarolo@hudco.com

Vice Chair of Programming
Andrew Noble
Severson & Werson
awn@severson.com

Vice Chair of Membership
Scott M. Pearson
Ballard Spahr LLP
pearsons@ballardspahr.com

Vice Chair of Legislation
Brian Farrell
Sheppard Mullin Richter & Hampton LLP
bfarrell@sheppardmullin.com

Secretary
Avital Samet
TrueAccord
avital@trueaccord.com

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