The Consumer Financial Protection Bureau (CFPB) recently released its Spring 2024 Supervisory Highlights report, focusing on consumer reporting companies (CRC) and furnishers. The report highlights the importance of accuracy in consumer reports and identifies deficiencies in compliance with the Fair Credit Reporting Act (FCRA) and Regulation V.
The full report can be found here. But we put together some of the key highlights the CFPB cited in their findings that pertain to the Auto Finance Industry as this was a noted area of focus in this publication:
The Furnishers’ Duty to Promptly Correct and Update Information
The CFPB found that auto loan furnishers violated their FCRA duty to promptly correct and update furnished information after determining its incompleteness or inaccuracy. Some furnishers continued to report incomplete or inaccurate information for several months or even years after identifying the issue.
This included reporting inaccurate dates of first delinquency and failing to update information after lease returns. Furnishers now need to conduct lookbacks and update their internal controls to ensure prompt correction and updating of furnished information.
The Furnishers’ Duty to Notify CRCs of Direct Disputes
Examiners found that auto loan furnishers violated the FCRA duty to notify CRC when the accuracy or completeness of furnished items were subject to dispute. Furnishers who received direct disputes from consumers continued to furnish disputed information to CRC without notifying them of the dispute. This has led to furnishers now being responsible for updating their policies to ensure proper notice of direct disputes to CRC.
The Furnishers’ Duty to Conduct Reasonable Investigations of Direct Disputes
Also found in these investigations was that auto loan furnishers failed to conduct reasonable investigations of direct disputes as required by Regulation V.
Some furnishers did not investigate disputes that met the requirements for a direct dispute, citing additional identity verification requirements that were not permitted under the regulation. Other’s deleted tradelines without conducting a proper investigation.
The Furnishers’ Duty Not to Furnish Information Resulting from Identity Theft
Another issue found was that auto loan furnishers violated the FCRA’s requirement to not furnish information that relates to a consumer upon receipt of an identity theft report. Furnishers continued to furnish information identified in the report as resulting from identity theft without knowing, or being informed by the consumer that the information was correct.
Public Means of Enforcement
The CFPB has already taken a stance on these problems by issuing an order against Toyota Motor Credit Corporation, one of the largest indirect auto lenders in the country. Toyota Motor Credit violated the Consumer Financial Protection Act by making it unreasonably difficult for consumers to cancel unwanted add-ons, failing to provide refunds for unearned premiums, and failing to provide accurate refunds for canceled vehicle service agreements.
They also violated the FCRA by failing to promptly correct negative information and failing to maintain accurate payment information. Toyota Motor Credit was ordered to pay $48 million in consumer redress and a $12 million civil penalty.
Conclusion
The CFPB’s Supervisory Highlights report sheds light on the exam findings related to compliance with FCRA and Regulation V by CRC and furnishers in the auto finance industry. The findings emphasize the importance of accurate reporting and prompt correction of information.
The Data Quality Scanner (DQS) exists to ensure the accurate reporting of furnished data. Utilizing a set of over 390 risk-ranked rules; DQS helps furnishers identify discrepancies in their data to ensure that issues like the above do not occur. If you are interested in learning more about this solution, schedule a demo with us today.
