The CFPB announced last week that it has entered into a settlement with Hyundai Capital America (Hyundai) to resolve alleged violations of the Fair Credit Reporting Act and Regulation V arising from Hyundai’s reporting of information on vehicle retail installment contracts and leases to consumer reporting agencies (CRAs) from 2016 to 2020.  The settlement requires Hyundai to pay a $6 million civil money penalty to the CFPB and $13.2 million in consumer redress.  The CFPB’s press release suggests that its investigation of Hyundai’s credit reporting practices was triggered by a high volume of consumer complaints about Hyundai.  It called the settlement “the CFPB’s largest Fair Credit Reporting Act case against an auto servicer.”

In the consent order, the CFPB made the following findings and conclusions:

  • Hyundai violated the FCRA requirement for a furnisher to promptly update and correct information that it furnished to a CRA that it “determines is not complete or accurate.”  Hyundai repeatedly furnished information that contained numerous systemic errors including inaccurate payment history profile information and other categories of inaccurate information such as information about the date of first delinquency, original loan amount, and payment rating.  Hyundai was aware of many of these furnishing errors as a result of internal audits in 2013 and 2017 but did not correct them until it implemented a new credit report furnishing system in 2020.  The CFPB found that Hyundai furnished inaccurate information in more than 8.7 million instances on more than 2.2 million consumer accounts during the relevant period.
  • Hyundai violated the FCRA requirement for a furnisher to modify or delete and block information disputed by a consumer if the furnisher finds the information is inaccurate.  Hyundai’s credit report furnishing system would override manual corrections that the company’s credit reporting disputes team made to correct inaccurately furnished information in response to consumer disputes.
  • Hyundai violated the FCRA requirements for a furnisher to (1) have reasonable procedures to respond to notifications from CRAs that furnished information is the result of identity theft and therefore must be blocked and should not be refurnished, and (2) not report information to a CRA after a consumer has submitted an identity theft report unless the furnisher subsequently knows or is informed by the consumer that the information is correct.  Hyundai’s systems did not properly block consumer information in accordance with these requirements nor did it have policies and procedures in place to ensure compliance.
  • Hyundai violated the Regulation V requirement for a furnisher to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of consumer information furnished to CRAs.  From at least 2010 to 2017, despite being aware of policy and procedure deficiencies, Hyundai did not review and update its furnishing policies and procedures and many of its procedures were inadequate and unreasonable given the volume, nature, size, complexity, and scope of the company’s activities.  For example, many of Hyundai’s procedures required manual inputs, such as manually calculating a consumer’s amount past due, late fees, and charge-off amounts.
  • Hyundai engaged in unfair acts or practices in violation of the CFPA by failing to appropriately assign ownership of furnishing-related processes within the company and to prioritize identified consumer reporting–related risks, underinvesting in technology and monitoring, and repeatedly delaying corrections of credit reporting errors.
  • Hyundai’s FCRA and Regulation V violations constituted CFPA violations.

The $13.2 million in redress required by the settlement is to be paid to consumers about whom Hyundai, after determining the information was inaccurate, furnished information to CRAs that they were 30 or more days past due on a retail installment contract or lease.  In addition to payment of the redress and $6 million civil money penalty, the settlement requires Hyundai to take steps to correct all inaccurate account information and examine its monthly furnishing data processes for the errors described in the consent order, take reasonable steps to identify such errors, and resolve identified errors before providing the data to a CRA.  Hyundai must also establish and implement written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to CRAs that include processes for identifying and promptly correcting systemic errors in the company’s credit report furnishing system.

Perhaps signaling increased scrutiny of auto servicers, the CFPB ended its press release by noting that “Americans owe $1.4 trillion in auto loans, making it the third largest consumer credit market” and giving its projection “that the average auto loan size will increase, given the recent dislocations in the global automotive supply chain and the resulting increases in the cost of automobiles.”