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CFPB Fines CarHop $6.4 Million

The CFPB charged the buy-here, pay-here dealer and its affiliated finance company, Universal Acceptance Corp., with providing inaccurate information to credit reporting agencies for more than 84,000 consumer accounts between January 2009 and September 2013.

by Staff
December 17, 2015
3 min to read


WASHINGTON, D.C. — The Consumer Financial Protection Bureau has ordered CarHop, a Minnesota-based buy-here, pay-here operation, and its affiliated financing company, Universal Acceptance Corporation, to pay $6.4 million for inaccurately reporting information for more than 84,000 consumer accounts, the agency announced today.

The CFPB charged CarHop and Universal Acceptance Corporation, which furnishes consumer account information to all three consumer reporting agencies on behalf of the BHPH operation, with violating the Fair Credit Reporting Act and the Consumer Financial Protection Act. According to the regulator's press release, the company furnished information it knew or had reason to believe was inaccurate from about January 2009 until September 2013.

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“Many consumers went to CarHop because they needed transportation and wanted to build up a good record of paying their bills,” said CFPB Director Richard Cordray. “But CarHop and Universal Acceptance Corp. thwarted those expectations by inaccurately furnishing negative credit information. The CFPB will not stand for companies whose sloppy actions jeopardize consumers’ credit.”

Along with paying the $6.4 million fine, the CFPB ordered CarHop and Universal Acceptance Corp. to cease misrepresenting that they will report good credit and correct credit reporting information. The company must also provide credit reports to harmed consumers and implement an audit program to ensure laws are followed.

CarHop operates about 50 retail locations in about 15 states and primarily sells vehicles to customers with nonexistent or poor credit histories. It markets itself as a way for these consumers to rebuild or build-up good credit by promising to provide positive payment histories to the credit reporting companies, according to the CFPB.

The CFPB said CarHop deceived consumers into believing they could build improve their credit standing, provided inaccurate repossession information, and incorrectly reported previous customers as still owing money.

CarHop allows consumers to voluntarily return their vehicles within 72 hours of purchase for a full refund without any penalties or additional obligation. But for some customers who took advantage of the company's return policy, Universal Acceptance didn't accruately report to credit reporting agencies what really happened. Instead, it reported on numerous occassions that the cars had been repossessed or the consumer still owed money.

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Universal Acceptance was also charged wiht not having written policies and procedures to ensure the accuracy of the credit information it provided to credit reporting agencies. Even when the firm put policies in place in August 2013, the CFPB said those policies "were not reasonable or appropriate to the nature, size, complexity, and scope of the company’s activities."

In a statement posted on its website,CarHop noted it settled the CFPB's charges without admitting fault. It said it agreed to settle "to move beyond the distraction of the invenstigation started in May 2012."

"Although the CFPB has made a number of allegations, it did not find that any consumer is entitled to the damages," the statement read, in part. "Over the last several years and prior to the initiation of the CFPB investigation, we had taken and have continued to take steps to positively enhance our customers' experience. We look forward to an ongoing relationship with the CFPB and hope to continue our constructive dialogue to improve our customer service and compliance practices in the years ahead."

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