Federal regulators are cracking down on an auto loan company that knowingly provided inaccurate information about tens of thousands of borrowers to credit reporting agencies.
The Consumer Financial Protection Bureau said Wednesday it is slapping Texas-based First Investors Financial Services Group Inc. with a $2.75 million fine and ordering it to fix mistakes it made on borrowers' credit reports.
First Investors discovered a problem with its computer systems that was causing it to send inaccurate information in 2011. The company reported the problem to the vendor, but did nothing else to resolve the situation and continued using the faulty system.
Cordray called it "careless disregard."
First Investors would understate the amount customers were paying, and overstate the amount they were past due. The auto lender would also inflate the number of delinquencies by borrowers, and report that the delinquencies were more recent than they actually were, causing the late and missed payments to stay on their credit reports longer.
"In one case, First Investors reported that a consumer was delinquent 11 times, when in fact, the consumer had only been delinquent twice," Cordray said.
"These errors can make a big difference in whether someone receives a loan, qualifies for a lower interest rate, or even gets a job," he added.