CFPB orders Honda's auto financing arm to pay $12.8 million for COVID-19 and other credit reporting failures

CFPB orders Honda's auto financing arm to pay $12.8 million for COVID-19 and other credit reporting failures

The Consumer Financial Protection Bureau (CFPB) has ordered Honda's auto financing arm, American Honda Finance Corporation (AHFC), to pay a hefty penalty of $12.8 million for violating the Fair Credit Reporting Act (FCRA) during the COVID-19 pandemic and other previous years [1].

AHFC, based in Torrance, California, was accused of providing inaccurate information to credit reporting agencies, leading to negative inaccurate information being placed on consumers' credit reports. This issue occurred due to the use of manual and outdated systems, processes, and procedures, which resulted in over 8.7 million instances of inaccurate information being furnished on more than 2.2 million consumer accounts between 2016 and 2020 [1].

The CFPB's investigation revealed that AHFC failed to take appropriate measures to address the inaccurate information once it was identified. Consequently, consumers were inaccurately reported as delinquent on their loans and leases, which could have negatively impacted their credit scores [1].

The CFPB's Director, Rohit Chopra, stated, "American Honda Finance Corporation illegally tarnished credit reports for millions of borrowers by falsely reporting them to credit reporting companies as being delinquent on their loans and leases" [1]. He emphasized that loan servicers must be complete and accurate when furnishing information that affects a borrower's credit report.

American Honda Motor Co. Ltd., Honda's parent company based in Tokyo, Japan, owns AHFC. AHFC is one of the largest furnishers of automotive finance account information in the United States, and its credit reporting practices significantly impact the credit scores of millions of Americans [1].

The CFPB's order requires AHFC to take steps to prevent future violations of the FCRA and to pay $12.8 million in penalties, including $10.8 million in redress to affected consumers and a $2 million civil money penalty [1].

References:
[1] CFPB. (2023, February 15). CFPB Orders American Honda Finance Corporation to Pay $12.8 Million for Widespread Credit Reporting Failures. Retrieved from https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-american-honda-finance-corporation-to-pay-12-8-million-for-widespread-credit-reporting-failures/