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CFPB Releases Supervisory Highlights Report




by:
Peter L. Cockrell
Greenberg Traurig, LLP - McLean Office

Brett M. Kitt
Greenberg Traurig, LLP - Washington Office

Gil Rudolph
Greenberg Traurig, LLP - McLean Office

J. Scott Sheehan
Greenberg Traurig, LLP - Houston Office

 
June 10, 2014

Previously published on June 4, 2014

On May 22nd, the CFPB released its latest supervisory highlights report, which summarizes significant examination findings of its Office of Supervision during the time period from November 2013 through February 2014.1 The report focuses principally upon its examination findings relating to non-bank entities in the payday, debt collection, and consumer reporting industries.

One finding in the report that is common among these industries is that many entities have weaknesses in their compliance management systems. The report cites examples of institutions that have no formal compliance management systems, insufficient board and management oversight of systems, and either no chief compliance officers or ineffective ones, as well as entities that have failed to document their policies and procedures in writing, update policies and procedures regularly, track or analyze consumer complaints, and exercise adequate oversight of their business relationships with third-party service providers.

In addition, the report identified the following issues that are particular to each industry:

Payday Lending

  • Deceptive Debt Collection: The report found that payday lenders collecting debts sometimes falsely threatened to take legal actions against consumers as a means of inducing payments. The report also noted that lenders would threaten to impose fees not permitted under loan agreements.

  • Unfair Harassment of Borrowers: The report found that some payday lenders collecting debts called borrowers excessively and that some payday lenders would visit borrowers’ workplaces to collect debt.

  • Use of Third-Party Service Providers: The report found that payday lenders were not properly supervising their third-party debt collectors and that those third-party debt collectors sometimes would mislead borrowers about their debt obligations.

Debt Collection

  • Deceptive Debt Collection: The report found that, like payday lenders, some debt collectors falsely threatened consumers with litigation that they did not actually intend to file as a means of inducing payments, in violation of the Fair Debt Collection Practices Act (FDCPA).

  • Harassment of Borrowers: The report found that some debt collectors made excessive numbers of calls to borrowers and called consumers during inappropriate times, also in violation of the FDCPA.

  • Failure to Investigate Credit Report Disputes: The report found that one debt collector failed to investigate disputed consumer credit report account information that it furnished to a credit reporting agency, as required by the Fair Credit Reporting Act (FCRA).

Consumer Reporting Agencies

  • Policies that Made it Difficult for Consumers to File Disputes Online or by Telephone: The report found that one or more consumer reporting agencies (CRA) refused to accept consumer disputes filed online or by telephone if the consumer had not recently received a consumer report or file disclosure from the CRA.

  • Failure to Forward Consumer Dispute Documents to Furnishers: The report found that, when consumers disputed the completeness or accuracy of information contained in their credit files, some CRAs failed to forward to furnishers of credit reports the documents that consumers submitted to the CRAs to substantiate their disputes.



 1 See the report at http://www.consumerfinance.gov/f/201405&under;cfpb&under;supervisory-highlights-spring-2014.pdf.

 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Peter L. Cockrell
Brett M. Kitt
Gil Rudolph
J. Scott Sheehan
Practice Area
 
Banking Law
Finance
 
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