Sub-prime lending has been on the rise recently and experts are conflicted as to how it will impact both the industry and the economy. What is a growing concern is sub-prime lenders with predatory or otherwise unscrupulous business activities such as First Investors Financial Services Group.
According to a report in Automotive News, First Investors Financial Services Group has been providing inaccurate information to credit reporting agencies for at least three years. The Consumer Financial Protection Bureau has determined that they must now pay a fine of $2.75 million.
The CFPB says First Investors failed to fix a flaw in their computer system that was sending inaccurate information to the various credit reporting agencies. This caused problems for consumers because the data falsely showed late payments and overdue accounts.
"Companies cannot pass the buck by blaming a computer system or vendor for their mistakes," CFPB Director Richard Cordray said in a written statement. "Today's action sends a signal that the CFPB will hold companies accountable for sending inaccurate information to credit reporting agencies."
First Investors must also correct errors on consumers' credit reports, help consumers obtain free copies of their credit reports and establish safeguards that ensure it reports only accurate information to the credit-reporting agencies. The lender denies any wrongdoing and claims that it will pay the fine rather than avoid the legal expenses to dispute it.
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