From staff reports WASHINGTON, D.C. – Equifax and the American Honda Finance Corporation were recently investigated by the Consumer Financial Protection Bureau (CFPB) for credit reporting errors and each company was fined millions of dollars.
The CFPB took action against Equifax, a nationwide consumer reporting company, on Jan. 17 for failure to conduct proper investigations of consumer disputes. A $15 million civil money penalty has been ordered.
The company is one of the three major consumer reporting agencies in the United States. It compiles data about most adult consumers and sells that data to its customers in the form of reports that are used by lenders, employers, landlords and others to make important decisions about consumers. Equifax processes about 765,000 disputes each month, according to information from the protection bureau.
“CFPB found Equifax ignored consumer documents and evidence submitted with disputes, allowed previously deleted inaccuracies to be reinserted into credit reports, provided confusing and conflicting letters to consumers about the results of its investigations, and used flawed software code which led to inaccurate consumer credit scores,” said recent documents.
In addition to the civil money penalty, which will be deposited into the CFPB’s victims relief fund, Equifax was ordered to comply with federal law. The Fair Credit Reporting Act (FCRA) requires consumer reporting agencies to investigate the accuracy of disputed information and take steps to ensure consumers’ credit reports are accurate.
Specifically, the CFPB found Equifax harmed consumers by failing to thoroughly investigate consumer disputes, putting previously deleted errors back on credit reports and failing to block identity-theft related information and also by sharing inaccurate credit scores and data about consumers with lenders.
The American Honda Finance Corporation was recently ordered by the CFPB to pay $12.8 million for reporting inaccurate information that affected the credit reports of 300,000 people who drive Honda and Acura vehicles. A press release by the CFPB said the auto lender wrongfully reported drivers as delinquent.
According to documents, Honda Finance deferred certain vehicle loan payments during the COVID-19 pandemic. However, the CFPB found that the company told credit reporting companies that borrowers were delinquent when they should have been reported as current. The CFPB’s investigation also found multiple other credit furnishing accuracy and dispute investigation failures. The CFPB is ordering the company to pay $10.3 million in redress to harmed customers and to pay a $2.5 million civil money penalty.
“Honda Finance used sloppy practices that smeared the credit reports of hundreds of thousands of its customers,” said CFPB Director Rohit Chopra. “False accusations on a credit report can have serious implications for Americans seeking a job, housing, or a loan.”
The protection bureau said, specifically, the company harmed consumers by damaging borrowers’ credit reports during a national emergency and failing to investigate disputes. In addition, Honda Finance continued furnishing inaccurate information even after determining several types of information was inaccurate.
Capital One sued over 360 Savings In other January action, the CFPB sued Capital One, N.A., and its parent holding company, Capital One Financial Corp., for withholding more than $2 billion in interest payments on savings accounts. A press release by the protection bureau said that the bank unlawfully misled consumers about its 360 Savings accounts and obscured its higher-interest savings product.
“The CFPB alleges that Capital One promised consumers that its flagship ‘360 Savings’ account provided one of the nation’s ‘best’ and ‘highest’ interest rates, but the bank froze the interest rate at a low level while rates rose nationwide. Around the same time, Capital One created a virtually identical product, ‘360 Performance Savings,’ that differed from 360 Savings only in that it paid out substantially more in interest - at one point more than 14 times the 360 Savings rate. Capital One did not specifically notify 360 Savings account holders about the new product, and instead worked to keep them in the dark about these better-paying accounts,” the release said.
Capital One, N.A. is a national bank with more than $480 billion in assets and is a wholly owned subsidiary of Capital One Financial Corp.
Medical bills to be removed from credit reports Earlier in the month, the CFPB finalized a rule to remove medical bills from credit reports and “end coercive debt collection practices that weaponize the credit reporting system.” The action, reported in a press release from the protection bureau, will remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. The rule will be effective 60 days after publication in the Federal Register.
The CFPB found that medical debts provided little predictive value to lenders about a borrowers’ ability to repay other debts, and consumers frequently report receiving inaccurate bills or are asked to pay bills that should have been covered by insurance or financial assistance programs.
“People who get sick shouldn’t have their financial future upended,” said Chopra. “The CFPB’s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.”
This action follows changes made by the three nationwide credit reporting conglomerates – Equifax, Experian, and TransUnion – who announced that they would take certain types of medical debt off of credit reports, including collections under $500, after the CFPB raised concerns about medical debt credit reporting in early 2022. Additionally, FICO and VantageScore, the two major credit scoring companies, announced they have decreased the degree to which medical bills impact a consumer’s score.