CFPB Orders Car Hop to Pay $6.4 Million for Damaging Customers’ Credit

CFPB Orders Car Hop to Pay $6.4 Million for Damaging Customers’ Credit

Car Hop is one of the largest “buy-here, pay-here” car dealers with about 50 locations in 15 states. Here in California, Car Hop has retail lots in Daly City, Hayward, Vallejo, Richmond, Sacramento, National City and Escondido. Car Hop, which advertises cars for as little as $99 down, sells very old, high mileage cars at extremely high prices and at extremely high interest rates.

Today, the Consumer Financial Protection Bureau (“CFPB”) announced it entered into a Consent Order with Car Hop and its financial arm, Universal Acceptance Corporation (“UAC”) under which Car Hop and UAC agreed to reform its practices concerning customers’ credit reports. The companies also agreed to pay a $6.4 million civil penalty to the CFPB.

The CFPB said the companies were in violation of the Fair Credit Reporting Act in several respects:

  • Car Hop promised buyers they would report “good credit” to the credit reporting agencies (CRAs), UAC failed to do so;
  • Car Hop gave buyers the right to return cars within 72 hours of purchase, but when they did, UAC often falsely reported to the credit bureaus the cars had been repossessed or the buyers still owed money;
  • Car Hop often settled disputes by taking cars back and promising to negate what was owed, but UAC often kept reporting to the CRAs the buyers owed the loan balance, sometimes in increasing amounts; and
  • Car Hop and UAC did not have a policy or procedure under which customers could dispute inaccurate reports to the CRAs.

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