The auto financing company First Investors Financial Services Group was fined $2.75 million last week by the Consumer Financial Protection Bureau for reporting incorrect information to credit agencies that affected thousands of customers.
The Texas-based company must pay the fine and fix affected customers’ information, according to the Washington Post. The problem started with a glitch in a computer system. First Investors knew about the problem in April 2010 and alerted the company that sold them the system that the reporting was wrong, but took no action to fix the incorrect reporting, violating the Fair Credit Reporting Acts.
The errors did serious damage to the credit scores of customers who already had shaky credit and were considered ‘subprime.’ First Investors understated how much consumers were paying on their debt, overstated the amount due and inflated the number of late payments. In one instance, First Investors reported a customer had been delinquent 11 times when really it was only twice. In some cases, First Investors reported that cars had been repossessed when the cars had actually been surrendered by their owners, which looks very different on a credit report.
First Investors Financial Services Group are required to fix the reporting problem and provide free credit reports for customers so they can check if all errors have been fixed.