CFPB Levels Massive Penalty on Hyundai

By Staff Writer July 28, 2022

The Consumer Financial Protection Bureau ordered Hyundai to pay more than $19 million, including $13.2 million in redress to consumers who were inaccurately reported as delinquent and a $6 million civil money penalty, making this the CFPB’s largest Fair Credit Reporting Act case against an auto servicer.

The CFPB penalized Hyundai Capital America for repeatedly providing inaccurate information to nationwide credit reporting companies and failing to take proper measures 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The CFPB found that Hyundai used manual and outdated systems, processes, and procedures to furnish credit reporting information—which led to widespread inaccuracies—and resulted in negative inaccurate information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.

In total, the CFPB found that Hyundai furnished inaccurate information in more than 8.7 million instances on more than 2.2 million consumer accounts during that period.

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

Hyundai Motor Group currently services approximately 1.7 million customers through its retail loans and leases and has over $45 billion of reported assets as of 2021.

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. 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.

When Hyundai furnished inaccurate negative consumer information, it sometimes led to lower credit scores and may have negatively affected consumers’ access to credit. The CFPB concluded that Hyundai’s use of ineffective manual processes and systems to furnish consumer information was unfair in violation of the Consumer Financial Protection Act (CFPA).

Between January 2016 and March 2020, the CFPB also found Hyundai violated the Fair Credit Reporting Act (FCRA) and its implementing regulation, Regulation V in numerous ways.

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Last modified on Wednesday, 03 August 2022 02:38