WASHINGTON — The Consumer Financial Protection Bureau settled a $1.1 million enforcement action with Xerox Business Services on Monday for allegedly misreporting borrower payment history to credit reporting agencies.

The company, now called Conduent Business Services, provided software to five auto lenders that would automatically generate the information, but the CFPB said a defect in the software code caused the auto lenders to report flawed data for more than a million borrowers in 2016 alone.

Conduent acquired the software from another developer, but created flaws when it made modifications to the code when some of the auto lenders asked for specific features.

CFPB Director Richard Cordray
"Xerox provided flawed software that resulted in incorrect or incomplete credit reporting information on more than a million borrowers,” said CFPB Director Richard Cordray in a press release. “The company compounded the problem by keeping lenders in the dark about the defects.” Bloomberg News

The CFPB also said that the company discovered the problem after some clients reported that inaccurate information was being sent to the credit bureaus, but did not notify other customers about the broken software.

"Xerox provided flawed software that resulted in incorrect or incomplete credit reporting information on more than a million borrowers,” CFPB Director Richard Cordray said in a press release. “The company compounded the problem by keeping lenders in the dark about the defects.”

Under the consent order the company signed, it will have to explain the errors to its auto lender customers, correct future problems within 30 days of being discovered and provide the CFPB with a compliance plan to prevent future mistakes.

“Mistakes on credit reports can greatly harm consumers, so we are ordering Xerox to fix its flawed systems,” Cordray said.

A Conduent spokesperson said the enforcement action stems from a 2014 investigation and that "we are focused on maintaining open communications with customers regarding any changes our partners make to their software that may impact their reporting.”

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