CFPB Cracks Down on CarHop's Inaccurate Credit Reporting
The Consumer Financial Protection Bureau recently reached a settlement with CarHop and its financing company, Universal Acceptance Corporation, for $6.4 million for inaccurate credit reporting allegations. The CFPB alleged CarHop and UAC failed to provide positive information to credit bureaus for more than 84,000 accounts, causing a widespread issue that negatively affected credit scores and credit histories for all impacted customers.
As a dealership, CarHop caters to customers with poor credit looking to rebuild their scores and secure reliable transportation. The company’s neglectful reporting practices caused thousands of customers to suffer declines on their already-troubled credit scores, according to the CFPB.
The dealership and its financing company were accused of violating the Fair Credit Reporting Act, which requires financial institutions to report “good credit” to credit reporting companies, such as on-time monthly payments. CarHop and UAC failed to do that on behalf of its customers, and subsequently were ordered to pay $6.4 million.
While CarHop did agree to the terms of the settlement, the company has not admitted fault. Instead, they are paying the fee “to move beyond the distraction of the investigation started in May of 2012.” Since the allegations and investigations started, the company says it has worked to improve its customer experiences and resolve the issues at hand.