Hyundai Capital America – the captive finance partner of Hyundai, Kia, and Genesis in the United States – has been slammed by the U.S. Consumer Financial Protection Bureau for “widespread credit reporting failures” that harmed millions of customers.
According to the government, HCA repeatedly provided inaccurate information to credit reporting companies and didn’t take proper steps once problems were identified. Furthermore, the Consumer Financial Protection Bureau alleges the company used “manual and outdated systems, processes, and procedures to furnish credit reporting information – which led to widespread inaccuracies – and resulted in negative inaccurate information being placed on consumers’ credit reports through no fault of their own.”
The scale of the problem was massive as the Consumer Financial Protection Bureau found HCA furnished inaccurate information about 2.2+ million customers on more than 8.7 million occasions between 2016 and 2020. Even worse, “In many cases, Hyundai knew it was providing inaccurate information and failed to take reasonable measures” to address the issue.
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This hurt consumers as HCA would report customers delinquent on loans and leases, despite having been paid on time. In particular, the government found “in approximately 570,000 instances, Respondent (HCA) inaccurately inserted codes showing delinquent or no payments in the PHP (payment history profile) when the consumer had in fact made the required payments and the account was actually current.”
Unsurprisingly, this lowered customer’s credit scores and impacted their access to credit. It also subjected them to higher interest rates due to their lower credit score.
Following an investigation, the Consumer Financial Protection Bureau determined HCA violated the Fair Credit Reporting Act by failing to report complete and accurate loan and lease account information, failing to provide date of first delinquency information when required, failing to modify or delete information when required, failing to have reasonable identity theft procedures, and failing to have reasonable accuracy and integrity policies and procedures.
In a statement, Consumer Financial Protection Bureau Director Rohit Chopra said “Hyundai illegally tarnished credit reports for millions of borrowers, including by falsely reporting them to credit reporting companies as being delinquent on their loans and leases.” He added, “Loan servicers must be complete and accurate when furnishing information that affects a borrower’s credit report.”
HCA will pay a $6 million civil penalty to the Consumer Financial Protection Bureau as well as $13.2 million in compensation to current and former customers who had inaccurate information furnished to credit reporting companies saying they were “30 or more days past due on an automobile retail installment contract or lease.”
While $19.2 million sounds like chump change, the Consumer Financial Protection Bureau noted this was their largest Fair Credit Reporting Act case against an auto servicer. The Bureau also revealed Americans owe $1.4 trillion in auto loans, making it the third largest consumer credit market.
H/T to Reuters
