The Consumer Financial Protection Bureau (CFPB) recently released its Fall 2024 Supervisory Highlights report, focusing on auto finance. Once again, the report highlights the importance of accuracy in consumer reports and identifies deficiencies under the Fair Credit Reporting Act (FCRA) and its implementing regulation, Regulation V.
The full report can be viewed here, but we have put together some of the key highlights the CFPB cited in their credit reporting findings that can serve as guidance to all furnishers:
Reporting Information with Actual Knowledge of Errors
In recent reviews of auto furnishers, examiners discovered that furnishers provided inaccurate information to credit reporting companies (CRCs), even though they knew or had reason to believe the data was incorrect.
Examiners also found that lenders were knowingly placing inaccurate loan information on thousands of consumers’ credit reports. This included incorrect amounts past due for charged-off accounts, inaccurate dates of when borrowers fell behind on payments, and inaccurate actual payment amounts following a payoff or settlement.
In some cases, lenders were relying on inappropriate computer systems that were not designed to report information about auto loans. In response to the findings, lenders are conducting reviews and correcting the furnished information for all affected consumers.
Not Clearly Providing an Address for Notices Relating to Inaccurate Information
Examiners also found that auto furnishers failed to clearly provide consumers with a specific address for reporting inaccurate information, violating Section 623(a)(1)(A) of the FCRA, which prohibits furnishing information they know or have reason to believe is inaccurate. Instead, furnishers listed general corporate addresses or other contact methods on their websites, but did not provide the correct address for handling inaccurate information notices.
Failure to Promptly Update or Correct Inaccurate Information
Under section 623(a)(2) of the FCRA, furnishers are required to promptly correct and update furnished information after determining that such information is incomplete or inaccurate.
In recent reviews, examiners found that furnishers continued to furnish information for several months, and in some cases over a year, after furnishers determined through monitoring or audit activities that the information was incomplete or inaccurate.
An example of this was auto furnishers continuing to report inaccurate past-due amounts and balance information on charged-off accounts for over a year and half after identifying these errors through internal audits.
In response to these findings, auto furnishers are enhancing policies and procedure to ensure they promptly correct or update furnished information after determining it is incomplete or inaccurate.
Previous Fines
The CFPB has previously taken action against companies for illegal practices in auto finance. Toyota Motor Credit paid $60 million for withholding refunds and tarnishing borrower credit reports. The CFPB also took action again Wells Fargo for illegally assessing fees and interest charges on auto and mortgage loans.
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.
Given these findings, recent crackdowns (imposing FCRA fines of $200 million+ over the last 12 months), and the CFPB’s use of automated methods to assess Metro 2® data quality in FCRA examinations, we invite you to explore our Data Quality Scanner (DQS). This low-cost, low-IT solution reviews 100% of furnished accounts and indirect disputes to ensure accurate FCRA Metro 2®-compliant credit reporting.
If you want to learn more about this solution, schedule a live demo with us today.
