Xerox fined for erroneous reports to credit reporting agencies
The CFPB announced it has taken action against Xerox Business Services, LLC, now called Conduent Business Services, for software errors that led to incorrect consumer information about more than one million borrowers being sent to credit reporting agencies. The company also failed to notify all of its auto lender clients about known flaws in its software that led to the errors. The Bureau’s consent order requires Xerox to pay a $1.1 million civil penalty, explain its mistakes to its lender clients, and fix its faulty software.
The Bureau reported that widespread defects in the loan-servicing software that Xerox used led lenders to report inaccurate information about consumers’ performance on their loans. In 2016, its reports for more than one million of the auto lenders’ 6.4 million customer accounts had one or more errors. Xerox had acquired the rights to this software from its creator, an independent software developer. When lenders asked for certain features, Xerox would modify the software’s source code. Between 2004 and 2010, one modification was supposed to enable three of Xerox’s clients to provide consumer data in the Metro 2 Format. Metro 2 is the standard industry format used for furnishing this information in a uniform way to credit reporting agencies. However, Xerox’s modifications were based on a flawed, unreleased version of Metro 2 source code that led to the reporting of incorrect consumer information.
In addition to the assessment of the $1.1 million civil money penalty, Xerox was ordered to describe the errors caused by its software to its client auto lenders, inform lenders of any future potential or actual errors within 30 days of its discovery, and explain the correct use of the software to its clients each time the coding is revised. It must also give the CFPB a plan showing that it will identify and fix all defects in its software, and ensure that the software will report accurate information to credit reporting agencies.