CFPB probes Honda financing arm

Bloomberg News

WASHINGTON — The financing arm of Honda is facing a probe by the Consumer Financial Protection Bureau, the auto financing division said in a routine regulatory filing. 

American Honda Finance Corp., which is wholly owned by Honda Motors, said on Friday that it received a “civil investigative demand” from the CFPB in November. The investigation is connected to the financing arm’s “furnishing of credit reporting information on consumer accounts.” 

The company said that it’s cooperating with the bureau, but “cannot predict the eventual scope, duration or outcome of this investigation and is unable to estimate the amount or range of potential losses, if any, at this time.” 

The CFPB declined to comment. American Honda Finance did not respond to requests for comment. 

The probe comes at the same time that the CFPB cracked down on another auto financing entity: Toyota Motor Credit Co. 

The CFPB in November ordered the auto finance division of Toyota to pay $60 million after the bureau found that it delayed and withheld customer refunds, made it difficult to cancel unwanted add-on products and reported false information about consumers to credit bureaus, according to a CFPB consent order. 

“Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers,” CFPB Director Rohit Chopra said at the time.

The Toyota enforcement action was the CFPB’s first settlement with an auto finance company since July 2022, when it issued a consent order to Hyundai’s U.S. financing arm. In that episode, the bureau fined Hyundai Capital America more than $19 million for submitting false information about consumers to credit reporting bureaus. 

The Honda financing division previously ran into trouble with the CFPB in 2015, when the bureau reached a $24 million settlement with the auto financier on charges that its partnering car dealers issued loans with disproportionately higher interest rates to minorities.