If you happened to need a sub-prime auto loan sometime in the past few years, and you happened to get said sub-prime loan from Houston's First Investors Financial Services Group, you may want to check your credit score.
Seriously. These guys might have screwed you over. Last week, First Investors was fined about $2.75 million by the U.S. Consumer Financial Protection Bureau over allegations that they botched the credit reports of thousands of car buyers. Knowingly. For years.
According to the CFPB, First Investors was fined for failing to ensure they sent accurate information on lenders to credit reporting agencies and for deceptive reporting practices. You know, things that can royally screw with customers' credit, making it difficult to buy a car, buy a house, get a job, or even rent an apartment in some markets. The CFPB claims that First Investors continued to send the credit reporting agencies flawed data over a period of three years, in some cases exaggerating the number of times borrowers fell behind on payments.
It appears First Investors first found out about some of its inaccurate reporting practices in March 2011, according to the complaint filed by the CFPB, when workers discovered that delinquencies were reported 11 times on one account, even though only two of those delinquencies were actually legitimate. The the company published an address where credit reporting inaccuracies could be sent, and eventually filed numerous disputes with the company.
Yet somehow during the nine month period between the company discovering the inaccuracies and actually fixing the problem, First Investors continued to furnish inaccurate payment histories to credit agencies for some 11,804 to 14,622 customers a month.
The CFPB also claims that from April 2011 to December 2013, First Investors reported account delinquency information it knew to be inaccurate for between 1,620 and 7,950 customer accounts every month. The complaint also states that from April 2011 to December 2012, First Investors knew it was inaccurately reporting the amount by which customers were past due, impacting somewhere between 1,326 and 2,747 customer accounts (they didn't actually fix anything on that one until they knew the bureau was investigating, by the way).
In December 2012, First Investors learned it was understating the amount customers were paying on their balances every month, and they continued to inaccurately report those numbers until June 2013, according to the CFPB, harming even more thousands of borrowers.
And that's notwithstanding a bunch of other shady stuff unearthed by the CFPB investigation -- like when First Investors failed to report that customers had voluntarily surrendered their vehicles, instead categorizing them all as "involuntary" repossessions.
In short, it appears First Investors was lending money to people who already had pretty gnarly credit -- at least in some cases -- and then further tanked their customers' credit, even if those borrowers were making payments on the regular.
The CFPB ultimately issued a 17 page document outlining all of the questionable reporting practices at First Investors.
As part of the deal, they've been fined $2.75 million by the bureau, have been ordered to correct their errors, and have been ordered to stop sending inaccurate information to credit agencies. The company has also been required to set up customers with credit monitoring, and are required to outline all the systematic inaccuracies that were identified in the CFPB's investigation.
In the consent order, which was signed on August 19, First Investors neither admits nor denies the CFPB's findings.
"To resolve the matter and to avoid the expense and business disruption associated with defending any lawsuit, First Investors elected to settle the CFPB's claims rather than dispute them in court. First Investors has not admitted any wrong doing," the company said in a written statement.