CarHop has been known as one of the country’s most popular auto dealers that allows buyers to “buy-here-pay-here.” The company has been in business for years, and has sold thousands of cars to people during that time. It comes as a bit of a surprise, then, to learn that the Consumer Financial Protection Bureau (CFPB) has announced that they are taking legal action against CarHop. According to the CFPB, CarHop and its in-house financing company, Universal Acceptance Corporation, are guilty of failing to provide positive and accurate credit information to consumers.auto750

Allegedly, CarHop and their financing company promised consumers that it would provide the positive, accurate credit information to the major credit reporting companies. The investigation by the CFPB has revealed that inaccurate credit information was provide on more than 84,000 accounts, and that the inaccurate reporting was a systematic issue within the companies. The Consumer Financial Protection Bureau has officially ordered the companies to stop the illegal activity and to pay a civil penalty of $6,465,000.

The Director of the CFPB is named Richard Cordray. He has been somewhat of a lightning rod of controversy in recent years. However, he has never backed down from going on record with what he thinks about these types of financial misdeeds. When asked about the actions against CarHop, Cordray said, “Many consumers went to CarHop because they needed transportation and wanted to build up a good record of paying their bills. But CarHop and Universal Acceptance Corporation thwarted those expectations by inaccurately furnishing negative credit information. The CFPB will not stand for companies whose sloppy actions jeopardize consumers’ credit.”

CarHop is based in Minnesota and also goes by the name of Interstate Auto Group. This dealer is amongst the largest buy-here-pay-here auto dealers in the United States. These types of auto dealers not only sell cars, but they originate and service the car loans as well. There are over 50 CarHop locations spread across 15 different states. The majority of CarHop’s customers are folks with poor credit scores or virtually no credit histories. These types of consumers regularly rely on subprime or deep subprime lines of credit. These types of loans are often marketed as easy ways for consumers to rebuild/build their credit scores. CarHop apparently promised that it would provide all positive payment histories to the major credit reporting agencies. Many of the customers who regularly purchase vehicles from CarHop do so due to the fact that they have severe financial obstacles to deal with or bad credit scores.

The Universal Acceptance Corporation operates on behalf of this popular auto dealer. This company provides consumer account information to the big credit reporting agencies every month. The Consumer Financial Protection Bureau, during their investigation, discovered that the company reported information that was obviously false. It is believed that the company provided inaccurate information to the credit agencies for over 84,000 consumer accounts. This apparently went on between January of 2009 and September of 2013.

Reporting inaccurate information to credit reporting companies can cause harm to consumer credit scores. Bad information could cause credit scores to drop and may even prevent consumers from obtaining good lines of credit, or favorable job positions. As such, it is easy to understand why such a large line was leveled by the CFPB. The public will have to stay tuned to find out whether or not CarHop is going to stay in business and whether or not their daily operations, policies and procedures will change due to the actions taken by the CFPB.