Software errors that led to auto lenders sending incorrect information about more than 1 million borrowers to credit reporting agencies has resulted in a $1.1 million fine and a demand for a plan from the software developer about fixing the errors, according to action reported Monday by the Consumer Financial Protection Bureau.
In the action against Xerox Business Services, LLC (now called Conduent Business Services, according to CFPB) of Dallas, Texas, outgoing Bureau Director Richard Cordray said the company provided flawed software that resulted in incorrect or incomplete credit reporting information on more than a million borrowers. “The company compounded the problem by keeping lenders in the dark about the defects. Mistakes on credit reports can greatly harm consumers, so we are ordering Xerox to fix its flawed systems,” Cordray stated in release.
The software by Xerox/Conduent automatically generated and transmitted information about borrowers’ auto loans to consumer reporting agencies, CFPB stated in its release. Lenders use information furnished to the consumer reporting agencies when considering whether to issue a loan and on what terms, “so it is essential in the information is accurate,” the agency stated.
The consumer bureau said its consent order against the company – for engaging in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws – took three actions:
- Ordered payment of the $1.1 million penalty, which will go to the CFPB Civil Penalty Fund, administered by the bureau;
- Required the company to explain the errors to its clients, and act to prevent future mistakes, by: describing the errors caused by the flawed software to the company’s client auto lenders; informing lenders of any future potential or actual errors within 30 days of its discovery; and explaining the correct use of the software to its clients each time the coding is revised.
- Giving the CFPB a plan showing that the company will identify and fix all defects in its software, and ensure that the software will report accurate information to credit reporting agencies.
CFPB Fines Xerox Business Services $1.1 Million for Incorrect Consumer Information Sent to Credit Reporting Agencies