CFPB v. American Honda Finance: What the 2025 Order Means for Borrowers
A clear breakdown of the CFPB’s 2025 enforcement action against American Honda Finance and what it means for auto borrowers and credit reports.
In January 2025, the Consumer Financial Protection Bureau (CFPB) issued a major enforcement order against American Honda Finance Corporation, the captive auto finance arm of Honda and Acura in the United States. The order centers on how the company reported customer information to credit reporting companies, particularly during the COVID-19 pandemic, and requires millions of dollars in payments and significant changes to its compliance program.
This article explains the action in plain language, outlines what went wrong, and offers practical lessons for anyone with an auto loan or lease whose information is being reported to credit bureaus.
Who Is American Honda Finance and What Did the CFPB Do?
American Honda Finance Corporation is a nonbank auto finance company that purchases and services loans and leases arranged by Honda and Acura dealerships across the country. As part of its business, it regularly furnishes customer account data—such as balances, payment status, and delinquencies—to the major credit reporting agencies.
On January 17, 2025, the CFPB issued a consent order finding that the company violated:
- Fair Credit Reporting Act (FCRA), which sets rules for companies that furnish data to credit reporting agencies.
- Regulation V, the CFPB’s implementing regulation for FCRA, including the “Furnisher Rule.”
- Consumer Financial Protection Act of 2010 (CFPA), which prohibits unfair, deceptive, or abusive acts or practices in consumer finance.
The CFPB ordered American Honda Finance to:
- Provide approximately $10.3 million in monetary relief to affected consumers.
- Pay a $2.5 million civil money penalty into the CFPB’s victims relief fund.
- Implement broad changes to improve the accuracy of its credit reporting and dispute handling.
Key Misconduct During the COVID-19 Payment Deferral Period
A central part of the case involves how the company treated borrowers who entered payment deferral programs during the COVID-19 crisis. According to the CFPB, American Honda Finance offered borrowers the option to defer certain payments and indicated that it would continue to report those customers as current on their accounts.
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Instead, the CFPB found that the company:
- Reported deferred borrowers as delinquent when they did not make payments that were not actually required during the deferral period.
- Furnished this negative information to credit reporting agencies, which then appeared on borrowers’ credit reports.
- Harmed roughly 300,000 consumers by damaging their credit histories during a declared national emergency.
Under temporary protections enacted in connection with COVID-19, federal law required certain lenders to continue reporting accounts as current when a borrower was in an approved accommodation and was meeting the modified terms. By reporting many of these borrowers as delinquent, the company both violated the law and potentially affected consumer access to credit, housing, and other opportunities tied to credit reports.
Other Credit Reporting and Dispute Handling Failures
Beyond the COVID-19 deferral issues, the CFPB identified multiple ongoing problems in how American Honda Finance furnished data and handled consumer disputes under the FCRA.
Continuing to Furnish Known Inaccuracies
The CFPB found that American Honda Finance:
- Continued to furnish inaccurate or incomplete information even after it identified certain data types as unreliable or flawed.
- Did not take adequate steps, in a timely way, to correct its systems and prevent further inaccurate reporting.
FCRA requires furnishers to stop reporting information that they know or reasonably should know is inaccurate and to correct or delete such data. Ignoring known problems at scale can significantly erode the integrity of credit reporting.
Deficient Investigations of Indirect Disputes
When consumers file disputes with a credit reporting company, the credit bureau forwards those disputes to the furnisher—called an indirect dispute—and the furnisher must investigate, review all relevant information, and report results back to the bureau within statutory timelines.
The CFPB found that American Honda Finance:
- Failed to complete many indirect dispute investigations on time, violating FCRA’s time limits for responding to credit reporting agencies.
- Did not consistently provide results of its investigations to the bureaus as required.
Weak Written Policies, Procedures, and Controls
Furnishers must have written policies and procedures to ensure the accuracy and integrity of information they send to credit reporting agencies. These policies must be reasonable in light of the nature, size, and complexity of the furnisher’s activities.
According to the CFPB, American Honda Finance:
- Lacked adequate written policies and procedures addressing all relevant aspects of data furnishing accuracy.
- Failed to implement appropriate internal controls and monitoring to detect and correct systemic errors.
Insufficient Handling of Direct Disputes from Consumers
Consumers can also send disputes directly to a furnisher if they believe information reported about them is inaccurate. Under FCRA and Regulation V, the furnisher must conduct a reasonable investigation and report the results to the consumer within set timeframes.
The CFPB found that American Honda Finance:
- Did not always perform reasonable investigations of direct disputes.
- Failed, in some instances, to provide timely written results of those investigations back to consumers.
These shortcomings meant that many consumers’ attempts to fix errors—whether through credit bureaus or directly—were not handled in the way federal law requires.
Financial Consequences: Redress and Civil Penalty
The enforcement order imposes both consumer redress and a civil penalty on American Honda Finance.
| Type of Payment | Amount | Purpose |
|---|---|---|
| Consumer redress | $10.3 million | Compensate affected borrowers whose credit reports were harmed or whose disputes were mishandled. |
| Civil money penalty | $2.5 million | Penalty paid into the CFPB’s Civil Penalty Fund to assist harmed consumers more broadly. |
In total, the company must pay $12.8 million in monetary relief and penalties as part of the resolution.
Required Reforms: Compliance, Governance, and Reporting
Beyond money, the CFPB’s order requires American Honda Finance to undertake extensive reforms to its compliance program and corporate governance around credit reporting.
Comprehensive Compliance Plan
Within a set period from the effective date of the order, the company must create and implement a comprehensive compliance plan addressing all violations identified. At a high level, that plan must:
- Lay out detailed steps for fixing the problems in data furnishing and dispute handling.
- Specify deadlines and timeframes for each corrective action.
- Describe how progress will be monitored and reported to senior leadership and the CFPB.
Role of the Board and Senior Executives
The order puts explicit responsibilities on the company’s Board of Directors and Chief Executive Officer for overseeing compliance.
- The Board must ensure adequate resources and authority are provided to implement the compliance plan.
- Executives must receive timely reports on the status of remediation and must authorize whatever actions are needed to achieve full compliance.
- The company must submit a written compliance progress report to the CFPB within one year, describing the steps taken and the status of implementation.
Redress Administration and Corrective Reporting
The company is also required to develop a redress plan describing how it will identify affected consumers, calculate compensation, and issue payments.
- Impacted borrowers must receive monetary relief without needing to take action themselves, where feasible.
- The company must work with credit reporting agencies to correct previously inaccurate information on consumer credit files.
Why Accurate Credit Reporting Matters
Credit reports are widely used beyond just lending decisions. Landlords, insurers, employers (in some cases), and utility companies may all review credit histories. When inaccurate negative information appears, consumers may face higher costs, fewer opportunities, or outright denials.
Federal law, including the FCRA, reflects this reality by imposing specific duties on both credit reporting agencies and furnishers of information:
- Furnishers must adopt reasonable policies and procedures to ensure accuracy and integrity.
- They must promptly correct or delete information that is determined to be inaccurate.
- They must investigate disputes thoroughly and on time, whether received indirectly (through a bureau) or directly from a consumer.
The CFPB’s action against American Honda Finance underscores that regulators view large-scale breakdowns in these obligations as serious violations that warrant both monetary and structural remedies.
Key Takeaways for Consumers With Auto Loans or Leases
Even if you are not a Honda or Acura customer, there are important lessons from this case for anyone whose loan or lease is reported to credit bureaus.
1. Monitor Your Credit Reports Regularly
Under federal law, consumers can get free credit reports from the major credit bureaus, and recent policy moves have expanded ongoing access. Reviewing your reports is the best way to catch:
- Accounts incorrectly reported as delinquent or charged off.
- Missed notations for payment accommodations or deferrals.
- Outdated or duplicate trade lines.
2. Pay Special Attention After Hardship Programs
If you enter a hardship or deferral program with your lender—whether due to a natural disaster, public health emergency, or individual hardship—confirm in writing how your account will be reported.
- Keep copies of emails, letters, and program terms describing how your status will be handled.
- Check your credit reports a few months after the accommodation begins to confirm the reporting matches those promises.
3. Use Both Direct and Indirect Dispute Channels
If you spot an error:
- Dispute with the credit bureaus so they are required to contact the furnisher and investigate.
- Also send a direct dispute to the lender or servicer’s designated address, clearly identifying the account, what is wrong, and including supporting documents.
Using both routes can increase the chances that the error is corrected and creates documentation that may help if you later need to escalate to regulators or seek legal advice.
4. Know That Regulators Can Step In
The CFPB and other agencies, including the Federal Trade Commission and state attorneys general, have authority to enforce consumer protection and credit reporting laws. When they identify widespread violations, they can order companies to provide redress and change their practices, as in the American Honda Finance case.
Broader Regulatory Context
This enforcement action is part of a broader pattern of increased scrutiny on how lenders and servicers handle credit reporting during crises and accommodations. Federal agencies have repeatedly emphasized that consumers should not be unfairly penalized on their credit reports when they obtain lawful payment relief during emergencies.
Regulators have also highlighted the importance of strong governance, accurate data pipelines, and robust dispute processes across the credit reporting ecosystem. Failures in any one part of this system—whether at the lender or bureau level—can have ripple effects on millions of consumers.
Frequently Asked Questions (FAQs)
Q1: How do I know if I was affected by the American Honda Finance reporting issues?
If you had a Honda or Acura loan or lease serviced by American Honda Finance, especially if you received a COVID-19-related payment deferral, review your credit reports for the period of the deferral. Look for any delinquencies reported while payments were paused. The company is required under the CFPB order to identify impacted consumers and provide redress where appropriate.
Q2: Will the CFPB’s action automatically fix my credit report?
The consent order requires American Honda Finance to work with credit reporting agencies to correct inaccurate data tied to the violations. However, changes may not appear immediately, and some errors may fall outside the scope of the order. It is still important to check your reports and file disputes if you see inaccuracies.
Q3: What should I include when I dispute an error on my auto loan?
Include your full name, address, date of birth, and the last four digits of your Social Security number, along with the account number, a clear description of what is wrong, and copies of any supporting documents (such as payment records, letters describing deferral terms, or billing statements). Send disputes by a trackable method and keep copies of everything you submit.
Q4: Is inaccurate credit reporting always illegal?
Not every isolated error is necessarily a legal violation. However, federal law requires furnishers to have reasonable policies and procedures to ensure accuracy, to correct known inaccuracies, and to investigate disputes reasonably and on time. When systemic failures occur—especially after a company becomes aware of problems—regulators may treat them as violations of FCRA, Regulation V, and the CFPA, as they did here.
Q5: Where can I learn more about my credit reporting rights?
The CFPB and Federal Trade Commission publish detailed consumer guides explaining your rights under the FCRA, how to access your credit reports, and how to dispute errors. Reviewing these materials can help you understand timelines, documentation requirements, and escalation options if your disputes are not resolved.
References
- American Honda Finance Corporation — Enforcement Action — Consumer Financial Protection Bureau. 2025-01-17. https://www.consumerfinance.gov/enforcement/actions/american-honda-finance-corporation-2025/
- Consent Order In the Matter of American Honda Finance Corporation, File No. 2025-CFPB-0003 — Consumer Financial Protection Bureau. 2025-01-17. https://files.consumerfinance.gov/f/documents/cfpb_american-honda-finance-corp-consent-order_2025-01.pdf
- CFPB Orders Honda’s Auto Financing Arm to Pay $12.8 Million for COVID-19 and Other Credit Reporting Failures — Consumer Financial Protection Bureau (press release as reproduced by Wolters Kluwer). 2025-01-17. https://business.cch.com/BFLD/CFPBOrdersHondasAutoFinancingArmtoPay-20250121.pdf
- CFPB penalties against American Honda Finance & Equifax approach $30M — Auto Remarketing. 2025-01-21. https://www.autoremarketing.com/subprime/cfpb-penalties-against-american-honda-finance-equifax-approach-30m/
- Fair Credit Reporting Act (FCRA) — Federal Trade Commission. (Current guidance page, regularly updated). https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act
- Credit Reporting & Repairing Your Credit — Consumer Financial Protection Bureau. 2024-05-01 (last updated). https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/
- Justice Department Obtains Over $1.5 Million from American Honda Finance Corporation to Compensate Servicemembers — U.S. Department of Justice. 2015-09-28. https://www.justice.gov/archives/opa/pr/justice-department-obtains-over-15-million-american-honda-finance-corporation-compensate-0
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