CFPB orders State Farm Bank to improve credit reporting practices
The Consumer Financial Protection Bureau on Thursday ordered State Farm's banking subsidiary in Bloomington, Ill., to stop providing inaccurate information to credit bureaus and to cease obtaining credit reports for no permissible purpose other than to solicit consumers for auto loans.
State Farm Bank’s President and CEO, Joe R. Monk Jr., signed the stipulation and consent order with the CFPB on Nov. 29 without admitting or denying any wrongdoing.
The CFPB did not impose a fine on State Farm for violations of the Fair Credit Reporting Act such as furnishing inaccurate information to credit reporting agencies.
The bureau said from 2012 to September 2016, State Farm had no specific guidance for complying with the FCRA, nor did the bank have processes in place on the accuracy and integrity of information furnished to the major credit bureaus, in violation of Regulation V.
The CFPB also did not specify how many consumers were harmed by State Farm’s alleged practices of obtaining credit reports on consumers without a “permissible purpose.”
The CFPB alleged that “in certain instances when the consumer had neither applied for a loan nor authorized Respondent to obtain a consumer credit report, Agents and Team Members initiated vehicle-loan applications for consumers for the purpose of soliciting those consumers, thereby triggering a credit inquiry.”
Last year, State Farm developed and implemented a consent management system to reduce the likelihood of obtaining or using a consumer report without a permissible purpose, the agency said.
The CFPB did not specify whether any consumers had had their credit damaged by State Farm's allegedly providing inaccurate information to credit reporting agencies or taking months to correct inaccurate information after consumers had complained.
The majority of State Farm Bank's business comes from credit cards and auto loans, including refinancing existing vehicle loans, the CFPB said.
State Farm is required to submit a copy of the consent order to each of its board members within 30 days and to submit a compliance plan, reviewed by its board, to the CFPB within 60 days.