The Consumer Financial Protection Bureau (CFPB)  has fined Texas-based First Investors Financial Services Group Inc., which lends primarily to subprime borrowers, $2.75 million for failing to fix known flaws in a computer system that was providing inaccurate information to credit reporting agencies.

“First Investors showed careless disregard for its customers’ financial lives by knowingly distorting their credit profiles for years,” said CFPB Director Richard Cordray. “Companies cannot pass the buck by blaming a computer system or vendor for their mistakes. Today’s action sends a signal that the CFPB will hold companies accountable for sending inaccurate information to credit reporting agencies.”

First Investors is a lending company that offers loans directly to consumers to finance the purchase of motor vehicles.

First Investors also offers loans indirectly to consumers by working through auto dealers. The company specializes in lending to consumers with impaired credit profiles; including consumers who have gone through bankruptcy. Because the company services its own loans, it supplies information on its accounts to the credit reporting agencies and is considered a furnisher under the Fair Credit Reporting Act (FCRA).

First Investors is one of many thousands of voluntary data furnishers that provide information to the credit reporting agencies.

Furnishers are required by law to have reasonable policies and procedures regarding the accuracy and integrity of the information they provide. Credit reporting agencies track a consumer’s credit history and other consumer transactions based on information supplied by the furnishers.

The reports that they sell are used in determining everything from consumer eligibility for credit to employment decisions.

The CFPB investigation found that First Investors furnished inaccurate information about its customers to credit reporting agencies for at least three years.

When First Investors discovered the problem in April 2011, it notified the vendor but did nothing more.

The company did not replace the system or take any steps to correct the inaccurate information it had supplied. It continued for years to use a system that it knew was flawed. Tens of thousands of consumers were likely subject to these systemic reporting problems.

The CFPB found that First Investors was providing distorted information to the credit reporting agencies regarding how its customers were performing on their accounts.