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Santander (SC) Fined $4.75M for Credit Reporting Violation

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A consent order has been issued by the Consumer Financial Protection Bureau (“CFPB”) against Santander Consumer USA Holdings Inc. (SC - Free Report) for allegedly violating the Fair Credit Reporting Act. The CFPB has ordered the originator and servicer of nonprime auto loans and leases to pay a fine of $4.75 million to settle charges that it knowingly supplied inaccurate consumer credit data to the three major credit reporting agencies (CRAs).

Per the consent order, between January 2016 and August 2019, the consumer loan data that Santander Consumer provided to the CRAs contained numerous “systemic errors” such as the wrong date when an account first became delinquent, which could have negatively impacted consumers’ credit scores and their access to credit.

Santander Consumer sent incorrect information to the CRAs on millions of accounts during the time frame mentioned above.

Moreover, per the CFPB, the auto loan originator was aware of some of the errors at least as early as September 2016 but failed to correct them. In fact, many of the errors were “internally inconsistent” and should have been “readily apparent” to Santander Consumer.

In addition to the fine that Santander Consumer has to pay, it has to fix the errors and improve its internal policies and procedures related to the information it provides to the credit agencies. Moreover, it has been asked to submit a detailed compliance plan to the agency within 45 days.

A spokeswoman for the lender stated, “We are pleased to resolve this legacy issue and put this matter behind us.”

This is not the first penalty imposed on the company in 2020. In May, Santander Consumer had agreed to a settlement of nearly $550 million with a group of attorneys general over malpractices in its subprime auto-lending business. The attorneys general represented 33 states and the District of Columbia, and had accused Santander Consumer of violating consumer protection laws by exposing borrowers with subprime credit into auto loans with a high chance of default.

The Dallas, TX-based lender paid $65 million to the states in restitution and $7 million to manage claims. Additionally, it forgave deficiency balances on car loans worth almost $478 million.

So far this year, shares of Santander Consumer have lost 7.5% compared with a 2.4% decline recorded by the industry.




Currently, the company carries a Zacks Rank #2 (Buy).

A few other stocks from the finance space worth a look are mentioned below.

Credit Acceptance Corporation (CACC - Free Report) has witnessed an upward earnings estimate revision of 80.1% for 2020 over the past 60 days. This Zacks Rank #2 stock has gained 11.8% over the past three months.

The Charles Schwab Corporation’s (SCHW - Free Report) current-year earnings estimates rose 8.8% in 60 days’ time. Further, the company’s shares have appreciated 49.8% over the past three months. At present, it sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Raymond James Financial, Inc. (RJF - Free Report) has witnessed an upward earnings estimate revision of 10.2% for the current fiscal year in the past 60 days. This Zacks #2 Ranked stock has gained 32.9% over the past three months.

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