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CFPB Orders CarHop to Pay $6.4 Million Penalty for Jeopardizing Consumers’ Credit
Friday, December 18, 2015 6:40 AM

Thursday, the Consumer Financial Protection Bureau said it is taking action against CarHop, one of the country’s biggest “buy-here, pay-here” auto dealers, and its affiliated financing company, Universal Acceptance Corporation, for providing damaging, inaccurate consumer information to credit reporting companies.

CarHop and its affiliate also failed to provide accurate, positive credit information that it promised consumers it would supply to the credit reporting companies. The CFPB’s investigation found that the companies inaccurately reported information for more than 84,000 accounts on a widespread and systemic basis. The CFPB is ordering the companies to cease their illegal activities and pay a $6,465,000 civil penalty.

Minnesota-based CarHop, also known as Interstate Auto Group, is one of the largest buy-here, pay-here auto dealers in the nation. Buy-here, pay-here dealers sell cars and originate and service the auto loan. CarHop has approximately 50 retail locations in approximately 15 states, including Arkansas and Oklahoma.

Almost all the information the companies inaccurately furnished to the credit reporting companies could potentially harm customers. The negative information could lower a consumer’s credit score, hamper their ability to obtain other credit, and hurt their job prospects. The CFPB found that CarHop and Universal Acceptance Corporation violated the Fair Credit Reporting Act and the Consumer Financial Protection Act. Specifically, the companies: 

  • Deceived consumers into believing they could build up good credit with CarHop.
  • Provided inaccurate repossession information. 
  • Incorrectly reported previous customers as still owing money.
  • Failed to have reasonable written policies and procedures to ensure the accuracy of consumers’ credit information. 

Enforcement Action

Pursuant to the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the CFPB orders released today, CarHop and Universal Acceptance Corporation must:

  • Cease misrepresenting that they will report “good credit.” 
  • Correct credit reporting information.
  • Provide credit reports to harmed consumers.
  • Implement an audit program to ensure laws are followed.
  • Pay a $6,465,000 civil penalty to the CFPB’s Civil Penalty Fund.

Review the consent order.