American Honda Finance Agrees to Settle CFPB Allegations Over Inaccurate Credit Reporting

Settlement Includes $10.3 Million in Consumer Redress and $2.5 Million Civil Penalty

American Honda Finance Corporation (AHFC), the financing arm of American Honda Motor Co., has reached a settlement with the Consumer Financial Protection Bureau (CFPB) to address allegations of inaccurate credit reporting. The agreement comes in response to claims that the company’s practices violated the Fair Credit Reporting Act (FCRA) and harmed hundreds of thousands of borrowers.

In a statement released on Friday (Jan. 17), the CFPB alleged that AHFC provided false and damaging information to credit reporting agencies, impacting the credit reports of approximately 300,000 consumers. The regulator accused the company of failing to rectify inaccuracies in its reporting, neglecting to investigate disputes, and omitting to send investigation results to credit reporting companies and affected consumers as required by law.

CFPB Director Rohit Chopra criticized AHFC’s practices, stating, “Honda Finance used sloppy practices that smeared the credit reports of hundreds of thousands of its customers. False accusations on a credit report can have serious implications for Americans seeking a job, housing, or a loan.”

The CFPB's order mandates AHFC to correct past inaccuracies in its reporting, provide $10.3 million in compensation to affected consumers, and pay a $2.5 million penalty to the CFPB’s victims relief fund.

In an emailed statement to PYMNTS, AHFC stated, “AHFC has not admitted any wrongdoing but resolved this matter to better focus on its customers. AHFC will continue its efforts to provide the best possible financing experience for its customers.”

This development coincided with a separate settlement involving consumer reporting agency Equifax, which agreed to pay a $15 million civil penalty following CFPB allegations of failing to ensure the accuracy of its credit reports.

The settlement adds to a growing list of enforcement actions targeting credit reporting misconduct by auto financing companies. In November 2023, Toyota Motor Credit was ordered to pay a $60 million fine for illegal lending practices and credit reporting violations. Similarly, in July 2022, Hyundai was fined over $19 million for providing inaccurate credit information and failing to address identified inaccuracies.

The CFPB’s actions underscore the regulator’s continued focus on holding financial institutions accountable for credit reporting practices that harm consumers.