Honda’s finance arm would report customers as delinquent even though they were current
January 24, 2025 at 17:29
- Honda Finance is being ordered to pay $12.8 million for a series of blunders that harmed consumers.
- During the pandemic, Acura and Honda waived payments but borrowers were still reported as delinquent.
- The company would also correctly report accounts as paid and then claim they weren’t paid.
The Consumer Financial Protection Bureau has ordered the American Honda Finance Corporation to pay $12.8 (£10.2 / €12.2) million for wrecking the credit scores of approximately 300,000 customers. That’s an alarming number of victims and it appears to have been the result of mistakes, oversights, and bad business practices.
According to the government, Honda Finance deferred certain vehicle loan payments during the COVID-19 pandemic. While this gave Acura and Honda borrowers a little bit of breathing room, the company reported customers as delinquent on their loans even though they were current.
More: Toyota Fined $60 Million For Shady Lending Practices Including Unwanted Product Bundles
Even worse, the government alleges that “Honda Finance continued furnishing inaccurate information even after determining several types of information was inaccurate.” When people rightfully complained, the company didn’t properly investigate disputes and also failed to send the results of those investigations to credit reporting companies and consumers when required.
Digging deeper into the complaint, the government says between February 2020 and May 2021, Honda Finance agreed to defer payments for nearly 85,000 accounts but reported them as delinquent. The Consumer Financial Protection Bureau also said the company “failed to promptly correct the account statuses for nearly 35,000 accounts where it correctly reported paid account status, but later inaccurately reported the accounts were not paid, resulting in harm to consumers.”
That’s just the tip of the iceberg as the firm “failed to promptly correct its reporting on roughly 30,000 accounts after determining that the original charge-off amount had been reported inaccurately.” They also failed to “promptly correct the account status for roughly 1,000 accounts after determining the account status had been reported inaccurately.”
Consumer Financial Protection Bureau Director Rohit Chopra slammed the company as he said, “Honda Finance used sloppy practices that smeared the credit reports of hundreds of thousands of its customers.” He added, “False accusations on a credit report can have serious implications for Americans seeking a job, housing, or a loan.”
Honda Finance was found to be in violation of the Fair Credit Reporting Act as they “furnished false and harmful information that ended up on borrowers’ credit reports.” To pay for their mistakes, the government is ordering the company to give $10.3 (£8.2 / €9.8) million to victims and pay a $2.5 (£2 / €2.4) million civil penalty.
The Consumer Financial Protection Bureau noted this isn’t their first fight with Honda Finance as they teamed up with the Department of Justice in 2015. At the time, the company was found to be illegally discriminating against African American, Hispanic, Asian, and Pacific Islander borrowers. In that case, they ended up paying $24 (£19.2 / €22.9) million for violations of the Equal Credit Opportunity Act.
