Hyundai hit with biggest fine in history under Fair Credit Reporting Act after customer credit ruin
The financial partner of hyundaiKia and Genesis in the United States, Hyundai Capital America, have been hit with huge fines by the US Consumer Financial Protection Bureau after “widespread credit reporting failures” hurt millions of customers.
The government reported that the HCA provided credit reporting companies with misinformation, and when this misinformation was identified, the company failed to take appropriate action to address the issue. In addition to this, the Financial Protection Office added that it used “manual and outdated systems, processes and procedures to provide credit report information – which led to widespread inaccuracies – and resulted in the placement of inaccurate negative consumer credit reporting information through no fault of their own.
According to the Financial Protection Bureau, HCA damaged the credit reports of more than 2.2 million customers, with the majority of cases known to the company but unseen.
These problems would come in the form of HCA customers reporting late payments on loans and leases, when in fact they had paid in full. The government revealed that “in approximately 570,000 cases, the respondent (HCA) incorrectly inserted codes indicating overdue or no payments into the PHP (payment history profile) when the consumer had in fact made the required payments and that the account was in fact open”.
This ruined customers’ credit ratings, making it very difficult for them to get new loans or lower interest rates everywhere. This violated the Fair Credit Reporting Act, resulting in a $13.2 million fine in compensation to HCA, as well as a $6 million civil penalty to the Consumer Financial Protection Bureau.
Consumer Financial Protection Bureau Director Rohit Chopra said in a statement, “Hyundai has unlawfully tarnished the credit reports of millions of borrowers, including falsely reporting them to credit reporting companies as behind on their loans and leases.
“Loan servicers must be complete and accurate when providing information that affects a borrower’s credit report.”
This fine is the largest Fair Credit Reporting Act case against an auto repairer in history, and with auto finance being the third largest consumer credit market, this is not done lightly.