WASHINGTON, DC – Today, the Consumer Financial Protection Bureau (CFPB) penalized Hyundai Capital America (Hyundai) for repeatedly providing inaccurate information to credit reporting companies nationwide and failing to take appropriate steps to address inaccurate information once it was identified between 2016 and 2020. The CFPB found that Hyundai used manual and outdated systems, processes and procedures to provide credit reporting information, which resulted in widespread inaccuracies, and resulted in inaccurate negative information was placed on consumers’ credit reports through no fault of their own. In total, the CFPB found that Hyundai provided inaccurate information in more than 8.7 million cases on more than 2.2 million consumer accounts during that period. The order requires Hyundai to take steps to prevent future violations and pay more than $19 million, including $13.2 million in restitution to affected consumers who were incorrectly reported as delinquent and a civil money penalty of $6 million of dollars, making it the CFPB’s Fair Credit Reporting Act. case against a car service.
“Hyundai illegally tarnished the credit reports of millions of borrowers, including by falsely reporting them to credit reporting firms as delinquent 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 headquartered in Seoul, South Korea. Its U.S. auto financing subsidiary, Hyundai Capital America, purchases and services retail installment contracts and vehicle leases originated by 1,600 Hyundai, Kia and Genesis dealers. As one of the leading providers of auto finance account information in the US, Hyundai’s credit reporting practices have a significant 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 more than $45 billion in reported assets as of 2021.
The CFPB received many complaints from consumers that Hyundai inaccurately reported account information to credit reporting companies. In its investigation, the CFPB found that Hyundai repeatedly provided inaccurate credit report information about consumers’ payments on loans and leases that Hyundai purchased and serviced. In many cases, Hyundai knew it was providing inaccurate information and did not take reasonable steps to correct the inaccuracies. Hyundai identified many of the problems causing these inaccuracies in its internal audits, but it still took years to resolve the issues.
When Hyundai provided inaccurate negative consumer information, it sometimes resulted in a lower credit score and may have adversely affected consumers’ access to credit. The CFPB concluded that Hyundai’s use of ineffective manual processes and systems to provide consumer information 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 lease account information: Hyundai repeatedly failed to promptly update and correct information it provided to credit reporting companies that it determined was not complete or accurate, and continued to provide this inaccurate and incomplete information. to provide information about the date of first delinquency when required: The FCRA requires data providers to provide credit reporting companies with the date of delinquency for when a delinquent account is being charged or col ·loca to collect Hyundai did not report a delinquency date for many consumers who were more than 90 days delinquent. Failure to modify or delete information when necessary: Hyundai’s furniture system often overruled manual corrections made by employees to respond to consumer disputes. The provisioning system would provide monthly updates to credit reporting companies that reintroduced the data error after it was disputed and corrected. Not having reasonable identity theft procedures: The FCRA requires providers to respond to any notification from credit reporting companies about information provided that is the result of identity theft. Hyundai failed to establish reasonable identity theft and related blocking procedures to respond to identity theft notifications, and continued to report such information that should have been blocked in a consumer report . Not having reasonable accuracy and integrity policies and procedures: Rule V requires providers to maintain written policies and procedures regarding the accuracy and integrity of the information provided. Hyundai did not review and update its credit reporting policies and procedures between 2010 and 2017. It was not until 2021 that the company finally updated some of its credit reporting policies and procedures.
The CFPB was created by the Consumer Financial Protection Act and has the authority 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 from the transmission of inaccurate information. about them. Today’s order requires Hyundai to:
Pay $13.2 million in compensation to current and former customers: The CFPB identified consumers about whom Hyundai, after determining that the information was inaccurate, provided credit reporting companies with inaccurate information that consumers were 30 or more days past due at an auto retailer. The installment contract or lease will receive compensation for the damage incurred. Pay a $6 million fine: Hyundai will pay a civil monetary penalty to the CFPB, which will be paid into the victim relief fund. This fund provides compensation to consumers harmed by violations of federal consumer financial protection law. Take steps to correct all 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 the reporting companies of credit Hyundai will also review its monthly data provision 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 for Identifying and Correcting Inaccurate Information: Hyundai will establish and implement written policies and procedures regarding the accuracy and completeness 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 to its employee practices to ensure that its employees properly route, classify, 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 anticipates that the average auto loan size will increase, given the recent disruptions in the global auto supply chain and the resulting increases in the cost of automobiles.
Consumers who have 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). Employees of companies who believe their company has violated federal consumer financial laws are encouraged to send information about what they know to firstname.lastname@example.org.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are fair, transparent and competitive. For more information, visit consumerfinance.gov.