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Leading Subprime Auto Finance Company Settles With CFPB for Violations of the Fair Credit Reporting Act

CFPB auto financeThe Consumer Financial Protection Bureau recently announced a consent order against a subprime automobile finance company for violations of the Fair Credit Reporting Act resulting from systemic errors in data furnished to credit reporting agencies between January 2016 and August 2019.

The company consented to the issuance by stipulation without admitting or denying the findings. The Bureau determined that the errors “should have been readily apparent because the data for certain accounts was internally inconsistent.” Also, one CRA notified the company of certain reporting discrepancies. The bulk of the order alleges that the company engaged in a pattern of re-aging accounts.

During the affected time period, 35 percent of all instances in which the company furnished a date of first delinquency, this date equaled the date of account information.

The date of first delinquency is the field used in calculating when a tradeline should drop off of a consumer’s credit report. Simply put, the date of first delinquency is the reporting date associated with the time the account first went into default and was not later cured.

The Bureau explains the date of account information as the date the company “pulled information from its system of record each month in order to send” the information to credit reporting agencies. According to the Bureau, “when furnishing in the Metro 2 format, furnishers like Respondent must provide the [date of account information] so that date is updated each month until the company stops reporting a tradeline.”

While the Metro 2 reporting requirements are much more detailed and technical, essentially the consent order points out that these two dates are distinguishable and if an account is severely delinquent, then these dates should not match. In addition, it was noted that the company was reporting a date of first delinquency on accounts that were current.

The company was assessed a $4,750,000 civil money penalty. In addition to correcting the inaccuracies, the company is to establish a monthly audit process to assess the accuracy and integrity of the reporting information along with implementing policies and procedures.

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Jessica Lesser is Of Counsel to Maurice Wutscher in Dallas. Jessica is a proven civil trial attorney with expertise in the regulatory framework of consumer finance, lending, and technology. A former managing attorney in the Consumer Protection Division of the Office of the Attorney General of Texas, she has two decades of litigation and regulatory compliance experience and is board certified in consumer and commercial law. Her leadership roles in private practice, state government, and within corporations demonstrate her adaptability and ability to provide solutions in highly regulated environments. Her extensive litigation experience provides for efficient and responsive results that are customized to a client’s needs. Jessica is the former chair of the Texas Board of Legal Specialization Advisory and Exam Commission for the consumer and commercial law specialization exam and past chair of the Consumer and Commercial Law Section, State Bar of Texas. For more information, see https://mauricewutscher.com/attorneys/jessica-lesser/

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