American Honda Finance to Settle CFPB Allegations of ‘Sloppy’ Credit Reporting

American Honda Finance Corporation (AHFC) reached an agreement with the Consumer Financial Protection Bureau (CFPB) to settle the regulator’s allegations that the company reported inaccurate information that was then added to consumers’ credit reports.

The CFPB alleged that the company violated the Fair Credit Reporting Act (FCRA) by furnishing false and harmful information that ended up on borrowers’ credit reports, continuing doing so after determining that several types of information were inaccurate, failing to investigate disputes about information it provided to credit reporting companies, and failing to send the results of investigations to those companies and consumers, when required, the regulator said in a Friday (Jan. 17) press release.

AHFC is the auto financing arm of American Honda Motor Co. and the sole authorized distributor of Honda and Acura vehicles in the United States. The inaccurate information it provided affected the credit reports of 300,000 borrowers, according to the release.

“Honda Finance used sloppy practices that smeared the credit reports of hundreds of thousands of its customers,” CFPB Director Rohit Chopra said in the release. “False accusations on a credit report can have serious implications for Americans seeking a job, housing or a loan.”

The CFPB’s order resolving these charges requires AHFC to take steps to correct its prior erroneous reporting, pay $10.3 million in redress to harmed consumers and pay a $2.5 million penalty to the regulator’s victims relief fund.

Reached by PYMNTS, AHFC said in an emailed statement: “AHFC has not admitted any wrongdoing but resolved this matter to better focus on its customers. AHFC will continue its efforts to provide the best possible financing experience for its customers.”

This news came on the same day that consumer reporting agency Equifax agreed to a settlement and consent order that will resolve CFPB allegations that it failed to take steps to ensure the accuracy of its credit reports. That consent order requires the company to pay a $15 million civil penalty.

In November 2023, the CFPB ordered Toyota Motor Credit to pay a $60 million fine for engaging in illegal lending practices and credit reporting misconduct that knowingly tarnished consumers’ credit reports with false information.

In July 2022, the regulator ordered Hyundai to pay more than $19 million for providing inaccurate information to credit reporting companies and failing to take proper steps to deal with inaccurate information after it was identified.