CFPB orders Hyundai to pay $19 million over widespread credit report failures
WASHINGTON DC – Today, the Consumer Financial Protection Bureau (CFPB) penalized Hyundai Capital America (Hyundai) for repeatedly providing inaccurate information to national credit reporting companies and failing to take appropriate action to process complaints. inaccurate information once identified between 2016 and 2020. The CFPB found that Hyundai used manual and outdated systems, processes and procedures to provide credit reporting information – leading to widespread inaccuracies – and resulted in the insertion of inaccurate negative information on consumer credit reports through no fault of their own. In total, the CFPB found that Hyundai provided inaccurate information in more than 8.7 million instances on more than 2.2 million consumer accounts during this period. The order requires Hyundai to take action to prevent future violations and to pay more than $19 million, including $13.2 million in damages to affected consumers who were wrongly reported as violators and a $6 civil penalty. million, making it the CFPB’s largest fair credit reporting act. case against a car repairer.
“Hyundai unlawfully tarnished the credit reports of millions of borrowers, including by falsely reporting them to credit reporting companies as being behind on their loans and leases,” CFPB Director Rohit Chopra said. “Loan servicers must be complete and accurate when providing information that affects a borrower’s credit report.”
Hyundai Motor Group is a major global automobile manufacturer based in Seoul, South Korea. Its U.S. auto finance subsidiary, Hyundai Capital America, purchases and services retail installment contracts and vehicle leases issued by 1,600 Hyundai, Kia and Genesis dealerships. As one of the largest providers of auto finance account information in the United States, Hyundai’s credit reporting practices have a major impact on the credit scores of millions of Americans. The company currently serves approximately 1.7 million customers through its retail loans and leases and has over $45 billion in reported assets in 2021.
The CFPB has received numerous consumer complaints that Hyundai has inaccurately reported account information to credit reporting companies. In its investigation, the CFPB found that Hyundai had repeatedly provided inaccurate credit report information regarding consumer payments on loans and leases that Hyundai had purchased and serviced. In many cases, Hyundai knew it was providing inaccurate information and failed to take reasonable steps to correct the inaccuracies. Hyundai identified many of the issues causing these inaccuracies in its internal audits, but still took years to resolve the issues.
When Hyundai provided inaccurate negative consumer information, it sometimes led to lower credit scores and could negatively impact consumers’ access to credit. The CFPB concluded that Hyundai’s use of inefficient manual processes and systems to provide information to consumers was unfair, in violation of the Consumer Financial Protection Act (CFPA).
Between January 2016 and March 2020, the CFPB also found that Hyundai violated the Fair Credit Reporting Act (FCRA) and its implementing regulation, Regulation V, by:
- Failure to report complete and accurate loan and rental account information: Hyundai repeatedly failed to take steps to promptly update and correct information provided to credit reporting companies that it believed was not complete or accurate, and continued to provide such inaccurate information. and incomplete.
- Not providing information on the date of the first payment default when required: The FCRA requires data providers to provide credit reporting companies with the default date when an overdue account is debited or placed for collections. Hyundai did not report a delinquency date for many consumers who were over 90 days past due.
- Not modifying or deleting information when necessary: Hyundai’s upholstery system has often supplanted manual corrections made by employees to respond to consumer disputes. The furnishing system would provide monthly updates to credit reporting companies which reintroduced the data error after it had been challenged and corrected.
- Failing to have reasonable identity theft procedures: The FCRA requires providers to respond to all notifications from credit reporting companies regarding information provided as a result of identity theft. Hyundai failed to establish a reasonable identity theft and related blocking procedure to respond to identity theft notifications, and continued to flag such information that should have been blocked on a consumer’s report.
- Failure to have reasonable policies and procedures for accuracy and integrity: Regulation V requires vendors to maintain written policies and procedures regarding the accuracy and integrity of information provided. Hyundai did not review and update its credit reporting policies and procedures from 2010 to 2017. It was not until 2021 that the company finally updated some of its credit reporting policies and procedures. credit information.
The CFPB was created by the Consumer Financial Protection Act and has the power to take action against institutions that violate consumer financial laws, including engaging in unfair, deceptive or abusive acts or practices and violating the FCRA, which protects consumers against the transmission of inaccurate information. about them. Today’s order requires Hyundai to:
- Pay $13.2 million in compensation to current and former customers: As identified by the CFPB, consumers about whom Hyundai, after determining that information was inaccurate, provided credit reporting companies with inaccurate information that consumers were 30 days or more overdue on a installment sale contract or automobile retail lease will receive compensation for the damage suffered.
- Paying a $6 million fine: Hyundai will pay a civil penalty to the CFPB, which will be paid into the victim relief fund. This fund compensates consumers harmed by violations of the federal Consumer Financial Protection Act.
- Take steps to correct any inaccurate account information: Hyundai will review all account files it currently provides to credit reporting companies and correct all inaccuracies and errors described in the order and send updated information to credit reporting companies. Hyundai will also review its monthly upholstery data processes for errors described in the order, take reasonable steps to identify such errors, and resolve identified errors before providing the data to any credit reporting company.
- Addressing procedures identifying and correcting inaccurate information: Hyundai will establish and implement written policies and procedures regarding the accuracy and integrity of consumer information it provides to a credit reporting company. Hyundai must specifically include processes to quickly identify and correct systemic errors in Hyundai’s credit reporting system. Hyundai will also review current policies and procedures and implement changes in its employee practices to ensure that its employees properly route, categorize, investigate and respond to all direct and indirect credit reporting disputes.
Read today’s order.
Americans owe $1.4 trillion in auto loans, making it the third-largest consumer credit market. The CFPB expects the average size of auto loans to increase, given recent disruptions to the global auto supply chain and resulting increases in the cost of automobiles.
Consumers having a problem with their auto loan, credit report, or other consumer financial product or service can file a complaint with the CFPB online or by calling (855) 411-CFPB (2372). Company employees who believe their company has violated federal consumer finance laws are encouraged to send information about what they know to [email protected]
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer finance law and ensures that markets for consumer financial products are fair, transparent and competitive. For more information, visit consumerfinance.gov.