CarHop Fined $6.5 Million for Providing Wrong Information to Credit Reporting Companies

CarHop Fined $6.5 Million for Providing Wrong Information to Credit Reporting Companies
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December 18, 2015

The Consumer Financial Protection Bureau (CFPB) is ordering an auto dealership and its affiliated financing company to pay $6.5 million in civil penalties for reporting inaccurate information to credit reporting companies.

The regulator took action against CarHop and Universal Acceptance Corporation following an investigation that found the companies inaccurately reported information for more than 84,000 accounts on a widespread and systemic basis.

The Minnesota-based company has about 50 retail locations in about 15 states. Dealers sell cars and originate and service the auto loan. The company bills itself as a place where customers with nonexistent or poor credit histories can buy a car and build their credit with on-time payments. The associated financing company furnishes consumer account information to all three major consumer reporting companies on a monthly basis.

A CFPB investigation found that the company reported information that it knew or had reasonable cause to believe was inaccurate. The company inaccurately furnished information for more than 84,000 accounts from about January 2009 until September 2013. In its advertising and sales practices CarHop billed itself as a place where consumers could build and maintain good credit, but Universal Acceptance Corporation failed to furnish certain positive information, including information that would support good credit.

Along with paying the fine, the company can no longer tell customers that they will report good credit to credit reporting companies, correct any incorrect reporting information, provide credit reports to harmed consumers, and implement an audit program to ensure that all laws are followed.

To read the full consent order, click here.