A&B Abstract:
The Summer 2019 edition of the CFPB’s Supervisory Highlights indicates recent examination focuses for several categories of consumer credit products.
CFPB Issues New Edition of Supervisory Highlights
On September 19, the Consumer Financial Protection Bureau (“CFPB”) issued the Summer 2019 edition of Supervisory Highlights, detailing examination findings relating to automobile loan origination, credit card account management, debt collection, credit reporting, and mortgage origination.
Automobile Loan Origination
In the auto loan origination context, the CFPB discusses when the selling of add-on guaranteed asset protection (“GAP”) products may constitute an abusive act or practice as prohibited under the Consumer Financial Protection Act. (In the event of theft of or damage to a vehicle, GAP products cover the difference between the amount the consumer owes on an auto loan and the amount received from the insurer.) Specifically, the CFPB indicates that the selling of GAP products to consumers with a low LTV may be an abusive practice, as such consumers are unlikely to benefit from the product.
Credit Card Account Management
The Supervisory Highlights focuses on four sets of practices in connection with credit cards:
- Failure to provide clear and conspicuous disclosures for certain pricing terms in online advertisements;
- Disclosures required under Regulation Z in order for a credit card issuer to obtain or enforce a consensual security interest in funds that a consumer has on deposit with the issuer in order to offset credit card debt;
- The use of deceptive threats of repossession or foreclosure in credit card collections; and
- Deceptive acts and practices in the marketing of secured credit card accounts.
Debt Collection
In the debt collection context, the CFPB reports examination findings that debt collectors have claimed and collected from consumers “interest not authorized by the underlying contracts between the debt collectors and the creditors.” By misrepresenting the amount due on a debt, such conduct violate Section 807 of the Fair Debt Collection Practices Act.
Furnishing
The Supervisory Highlights includes five sets of findings relating to the furnishing of consumer information to consumer reporting companies (“CRCs”). Specifically, CFPB examiners identified failures of furnishers to:
- timely conduct an investigation of, or respond to, notice of a dispute from CRC, in violation of Section 623(b)(1) of the Fair Credit Reporting Act;
- report the results of dispute investigations to all CRCs to which they provided information about consumers;
- promptly correct and update information previously furnished to a CRC that is incomplete or inaccurate;
- provide notice to CRCs in connection with the reporting of information whose accuracy or completeness is disputed by a consumer; and
- implement reasonable policies and procedures regarding the accuracy and integrity of information relating to consumers that is furnished to CRCs.
Mortgage Origination
Finally, the Supervisory Highlights discusses examination findings relating to the inaccurate disclosure of APR and total annual loan cost information for closed-end reverse mortgage transactions, in violation of Regulation Z.
Takeaway
Each edition of the Supervisory Highlights provides related industries a glimpse into the Bureau’s current examination priorities. Entities should take the opportunity to review the issues discussed above, as applicable to their business practices, to help ensure their own compliance with federal laws and regulations.