Software Company Pays CFPB $1.1 Million Over Allegedly Providing Erroneous Information to CRAs

Auto Finance  •  CFPB

On November 20, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consen​t order with a company that operated and customized a third-party software application for five auto lenders.  The software at issue provides information about consumers and their auto loans to credit reporting agencies (CRAs).  The consent order resolves allegations that the company operated its software in a manner that contributed to the transmission of incomplete consumer information to CRAs.

Specifically, the CFPB alleged that the company used a version of the software that was incapable of accurately furnishing information, and failed to notify auto lenders when it learned that defective information had been reported.  Examples of the allegedly incorrect information include ​​actual payment amount, date of delinquency, and the date of the consumer’s last payment.​  As a result, according to the CFPB, the credit reports of more than one million of the affected auto lenders’ customers reflected one or more reporting errors from transactions that occurred in 2016.  The CFPB alleged that this conduct constituted unfair, deceptive, or abusive practices in violation of Section 1036 of the Consumer Financial Protection Act.

Pursuant to the consent order, the company must notify and explain the errors to each of its clients and submit a compliance plan to the CFPB.  The company also agreed to pay a $1.1 million civil money penalty.

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