Hyundai settles CFPB auto credit reporting case for $19M

News

Captive finance company Hyundai Capital America has agreed to pay $13.2 million in restitution and a $6 million civil penalty to settle allegations it gave incorrect consumer information to credit reporting companies.

The Consumer Financial Protection Bureau, which announced the settlement Tuesday, said Hyundai provided wrong or incomplete information on more than 2.2 million consumer accounts between 2016 and 2020.

“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,” CFPB Director Rohit Chopra said in a statement. “Loan servicers must be complete and accurate when furnishing information that affects a borrower’s credit report.”

The agency called the $19.2 million settlement its largest Fair Credit Reporting Act case against an auto finance servicer.

Hyundai admitted no wrongdoing in its July 22 stipulation to the CFPB’s July 25 consent order.

“To support our customers and allow us to focus on the future, we have entered into a settlement agreement with the CFPB. It is important to note that HCA is not admitting any fault or wrongdoing with respect to credit reporting practices covered by the investigation,” Hyundai Capital America said in a statement. “As part of HCA’s efforts to drive continuous improvement, we have already launched an end-to-end review of our current credit reporting practices. Most importantly, we remain fully committed to providing our customers with timely, accurate, high-quality service and care.”

The CFPB said the $13.2 million restitution will go to consumers whom Hyundai had reported as 30 days past due on loans or leases despite knowing this to be inaccurate.

According to the CFPB, Hyundai made several million errors or omissions of required information on consumer credit reports. These allegations included:

  • In some instances, the captive finance company manually corrected the mistake on the consumer’s behalf — only to have Hyundai’s software override the change and resubmit the error to the credit bureaus, the CFPB said.
  • Hyundai reported customers who were legitimately behind on loans, but it allegedly failed to provide the date the consumers first became delinquent — an important piece of information for determining when the blemish will be removed from their credit history.
  • Coding errors allegedly led Hyundai’s entire lease portfolio to carry incorrect notices of customer disputes or absent information. Hyundai also for much of 2017 overrode correct initial loan amounts for lessees and reported higher starting amounts, “making it appear that a customer had taken out a larger loan than they had actually taken out,” the CFPB’s consent order stated.
  • Hyundai allegedly reported more than 189,000 customers as simultaneously delinquent and having no account past due. Unless the customer went bankrupt, this can’t be the case, according to the CFPB, which said it suspects many of these instances to be further Hyundai errors.
  • Hyundai transmitted information it should have blocked after receiving a report the customer’s identity had been stolen, the CFPB said.

“In its investigation, the CFPB found that Hyundai repeatedly provided inaccurate credit report information about consumer payments on loans and leases that Hyundai purchased and serviced,” the CFPB wrote in a news release.

“In many cases, Hyundai knew it was providing inaccurate information and failed to take reasonable measures to address the inaccuracies. Hyundai identified many of the issues causing these inaccuracies in its internal audits, but still took years to address the problems.”

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