The Consumer Financial Protection Bureau (CFPB) issued a release on May 2, 2022, announcing the release of its Supervisory Highlights outlining identified consumer protection violations during the second half of 2021. In particular, the CFPB highlighted two industries of concern in its press release: auto servicers and credit reporting companies.

As for auto servicers, the CFPB noted the issues related to repossessions and the impact on the consumer. The CFPB focused on the consumer’s loss of personal property left in a repossessed vehicle and the hardship incurred by the consumer for the return of their personal property. Additionally, the CFPB recognized the implications that a sudden loss of transportation may have on an individual and the ability to maintain employment. The CFPB also contended that some auto servicers failed to provide consumers refunds for add-ons, such as GAP insurance, to the vehicle after repossession and misled consumers about their final loan payments particularly after payment deferments following COVID-19.

The CFPB also claimed that credit reporting companies were not complying with their duties to investigate disputed debts, as required by the Fair Credit Reporting Act (FCRA). Under FCRA, credit reporting companies must timely investigate disputed debts by consumers. Part of that investigation includes reviewing and considering evidence in the reporting company’s file and evidence submitted by consumers.

The press release highlights medical debts on consumer credit reports as an example of an apparent failure to investigate. The CFPB explained that adding unverified medical debt to a consumer’s credit report coerces the consumer to pay the amount listed when the amount of the medical debt might be inaccurate. The CFPB placed credit reporting companies and furnishers on notice of their duty to ensure medical bills are accurate before reporting the debt. If the credit reporting companies and furnishers of medical debt cannot guarantee this, “the CFPB expects credit reporting companies to limit [the furnishers] access” to consumers’ credit reports.

In addition to the topics highlighted in the CFPB’s press release and discussed above, the CFPB’s Supervisory Highlights for the second half of 2021 discussed the following consumer protection violations, among others:

Auto Servicers

  • Repossessing vehicles after consumers took action to prevent the repossession. 

Credit Reporting Companies

  • Failing to provide timely notice of a credit dispute to furnishers of credit information
  • Failing to provide timely written notice to consumers with the finding of their credit dispute investigation
  • Failing to investigate consumer disputes and instead deemed the disputes frivolous, sent incorrect results of disputes to consumer reporting companies
  • Auto furnishers incorrectly calculated consumers’ payment history during dispute investigations and provided incorrect payment histories to credit reporting companies.
  • Furnishers failed to update and correct consumer information to consumer reporting companies once on notice

Debt Collectors

  • Continuing to pursue debts against consumers after being notified that the debt resulted from identity fraud
  • Misrepresenting to consumers that they were legally obligated to pay debts created by the fraud of another
  • Failing to timely refund overpayments of credit balances to consumers.\

Takeaways

The CFPB continues to stress its commitment to strengthening the enforcement of consumer protection violations. The CFPB’s Supervisory Highlights exemplify its mission to expand its reach to examine banks and other non-bank financial services companies. Companies with a nexus to the financial services industry are on notice to institute policies and procedures to ensure compliance with the CFPB’s expansive reading of UDAAP and Fair Lending. Additionally, furnishers of information to credit reporting companies are on notice to provide accurate credit information. The CFPB has granted credit reporting companies the right to limit furnishers of medical bills’ access to consumer credit reports that fail to provide accurate information. Given the consumer-friendly nature of the CFPB, Director Rohit Chopra may announce his approval to expand the list of furnishers with limited access to consumer credit reports.

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Photo of David T. Long Jr. David T. Long Jr.

David Long counsels clients in complex banking and financial services matters in both state and federal courts across the country. Based upon the specific needs of his clients, he advises individuals and corporate clients on their claims and outlines strategies to achieve the…

David Long counsels clients in complex banking and financial services matters in both state and federal courts across the country. Based upon the specific needs of his clients, he advises individuals and corporate clients on their claims and outlines strategies to achieve the best result for each client.

David also has extensive experience representing and advising multinational corporations to ensure compliance with state and federal regulations.

Photo of Andrew J. Narod Andrew J. Narod

Andrew Narod is an experienced litigator who represents bank and non-bank financial services institutions and other types of businesses in class-action litigation, complex commercial litigation, and other high-profile litigation disputes nationwide. His clients entrust him to navigate some of their most sensitive litigation…

Andrew Narod is an experienced litigator who represents bank and non-bank financial services institutions and other types of businesses in class-action litigation, complex commercial litigation, and other high-profile litigation disputes nationwide. His clients entrust him to navigate some of their most sensitive litigation matters in some of the most difficult venues in the country.

Photo of Christopher K. Friedman Christopher K. Friedman

Chris Friedman is a regulatory compliance attorney and litigator who focuses on helping consumer finance companies and small business lenders, as well as banks, fintech companies, and other participants in the financial services industry, address the challenges of operating in a highly regulated…

Chris Friedman is a regulatory compliance attorney and litigator who focuses on helping consumer finance companies and small business lenders, as well as banks, fintech companies, and other participants in the financial services industry, address the challenges of operating in a highly regulated sector. Chris focuses on both small business lenders and alternative business finance products and has helped non-bank small business lenders, banks who make small business loans, commercial credit counselors, lead generators, and others in the industry. He helps clients launch new products, conduct due diligence, engage in compliance reviews, evaluate litigation risk, and solve some of the unique legal problems faced by companies who work with small businesses. In that vein, Chris has written extensively about the upcoming rulemaking related to Dodd-Frank 1071, which will require data collection and reporting by companies making loans to certain small businesses.