According to the release, Santander allegedly knew that it provided incorrect consumer data to the three major credit reporting agencies (CRAs).
Santander is an originator and servicer of non-prime auto loans and leases and provides credit information to CRAs via monthly data files, according to the CFPB release.
Between January 2016 and August 2019, the CFPB said it discovered numerous “systemic errors” that could have lowered consumers’ credit scores, such as the wrong date an account first became delinquent, according to a consent order. During that time frame, Santander reportedly sent incorrect information on millions of accounts to the CRAs.
Aside from the $4.75 million civil penalty, the ruling requires that Santander “must correct all inaccuracies and errors” and implement measures “to improve and ensure the accuracy of the consumer information it provides to CRAs,” the release stated.
The CFPB also alleged in the order that the “internally inconsistent” errors should have been “readily apparent” to Santander. The agency said the lender knew something was wrong as early as September 2016.
The order indicated that Santander must submit a detailed compliance plan to the CFPB within 45 days.
The shift to digital brought on by the pandemic has disrupted many industries, including the car buying and loan industries. J.D. Power research indicated that the number of customers doing credit applications online has soared, whether the car loan originates from a car dealer, bank or manufacturer. The research noted that roughly one-third of car buyers are now doing the loan process online, and 40 percent said they prefer it that way.
British banks — including Santander, Deutsche Bank, Barclays and HSBC — are reportedly planning internal investigations to ensure fairness in lending during the pandemic.