WASHINGTON The Consumer Financial Protection Bureau has ordered First Investors Financial Services Group to pay a nearly $3 million fine on charges the subprime auto lender reported inaccurate customer credit information to the credit bureaus.
The order issued Wednesday alleges the Texas-based company knew there was a flaw with its computer system that led to incorrect credit profiles being reported to the credit reporting agencies, but did not fix the problem.
The CFPB claims the reporting error potentially harmed "tens of thousands" of consumers. First Investors Financial has agreed to pay a $2.75 million fine, fix the error and change its business practices, the CFPB said.
"First Investors showed careless disregard for its customers' financial lives by knowingly distorting their credit profiles for years," CFPB Director Richard Cordray said in a press release. "Companies cannot pass the buck by blaming a computer system or vendor for their mistakes. Today's action sends a signal that the CFPB will hold companies accountable for sending inaccurate information to credit reporting agencies."
The CFPB said First Investors discovered the reporting problem in April 2011 and notified its vendor. But, the bureau said, the company "did nothing more," such as replacing the system or correcting errors. The agency said First Investors provided wrong data on how much customers were paying toward their loans, misreported delinquency dates and total amounts of delinquencies, and mischaracterized whether a vehicle was repossessed or "voluntarily surrendered" by the consumer.
"The CFPB will continue to enforce federal laws to ensure accuracy in credit reporting and protect consumers from deceptive acts and practices," the agency said in the release.