CFPB Fines Subprime Finance Source $2.75 Million
WASHINGTON, D.C. — On Wednesday, the Consumer Financial Protection Bureau (CFPB) ordered First Investors Financial Services Group Inc. to pay a $2.75 million fine for providing inaccurate information to credit reporting agencies. The issue was related to computer system flaws, which the agency said impacted “tens of thousands” of the auto finance company’s customers. Texas-based ... Read More »
WASHINGTON, D.C. — On Wednesday, the Consumer Financial Protection Bureau (CFPB) ordered First Investors Financial Services Group Inc. to pay a $2.75 million fine for providing inaccurate information to credit reporting agencies. The issue was related to computer system flaws, which the agency said impacted “tens of thousands” of the auto finance company’s customers.
Texas-based First Investors, which primarily operates in the subprime auto finance segment, allegedly failed to fix known computer system flaws and continued to furnish information it knew to be inaccurate for at least three years. These actions were in violation of the Fair Credit Reporting Act’s Furnisher Rule, according to the bureau’s consent order.
“Consumers are harmed when companies furnish inaccurate information to credit reporting agencies. Incorrect reports on file at credit reporting agencies — such as Experian, TransUnion, and Equifax —distort the true picture of how consumers have performed on their loans,” said CFPB Director Richard Cordray in a prepared statement. “An error could make a big difference in whether someone receives a loan, qualifies for a low interest rate, or even gets offered a job. It has the potential to disqualify people for rental housing or raise their premiums for auto insurance.”
An investigation by the CFPB found that First Investors initially discovered it was providing distorted information in April 2011. The company informed the vendor but took no further action. Instead, it continued to provide inaccurate customer information to credit reporting agencies, including wrong payments and overdue amounts, distorted delinquency dates, inflated delinquencies and misreports of vehicle repossession.
“There were all kinds of inaccuracies reported by First Investors,” Cordray noted. “… In one case, it reported that a consumer was delinquent 11 times when in fact that consumer had only been delinquent twice.”
According to the consent order, First Investors must identify the affected consumer credit profiles and make necessary adjustments, as well as establish safeguards to prevent such errors in the future. The finance source must also give its customers free copies of their credit reports.
This is the second time subprime auto finance has come under the spotlight in recent months. In July, both GM Financial and Santander Consumer USA received subpoenas from the Department of Justice (DOJ) requesting information related to underwriting and securitization of nonprime auto loans since 2007.
“We will continue to monitor this market carefully,” Cordray said. “And we will not hesitate to take further enforcement actions as they are needed.”
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →