Every month, we host a 30-minute webinar outlining the month’s key bulletins and takeaways from the Shopper Monetary Safety Bureau (CFPB) for monetary providers suppliers to think about. On this month’s article, we share a few of our prime “bites” coated through the January 26 webinar.
So what occurred on the CFPB previously month? An entire lot.
Chunk #10 – Settled with a mortgage servicer.
The CFPB settled with a mortgage servicer over alleged violations of the Shopper Monetary Safety Act and Regulation Z in relation to processing loss mitigation functions. The CFPB claimed that the mortgage servicer violated the CFPA by:
- systematically failing to precisely assessment, course of, monitor, and talk data to debtors concerning their functions; and
- sending quite a few debtors acknowledgment notices concerning their functions that misrepresented the standing of borrower paperwork and supplied inaccurate due dates for submission of borrower paperwork.
The CFPB claimed that the mortgage servicer violated Regulation X, which implements the Actual Property Settlement Procedures Act, by:
- sending quite a few acknowledgment notices that didn’t state the extra paperwork and knowledge debtors wanted to submit to finish their loss mitigation functions or failed to supply an affordable due date for submission of borrower paperwork;
- not exercising cheap diligence in acquiring paperwork and knowledge obligatory to finish debtors’ loss mitigation functions and by failing to correctly consider debtors who submitted full loss mitigation functions for all loss mitigation choices obtainable to the borrower; and
- failing to deal with sure functions as “facially full” when required.
The CFPB ordered practically $5 million in client redress and a $500,000 civil penalty.
Chunk #9 – Issued a second debt assortment rulemaking.
The CFPB issued a remaining rule to implement Truthful Debt Assortment Practices Act (FDCPA) necessities concerning sure disclosures for customers. This remaining rule follows the CFPB’s current FDCPA rulemaking regarding assortment communications. The rule:
- requires debt collectors to supply, on the outset of assortment communications, detailed disclosures concerning the client’s debt and rights in debt assortment, together with data to assist customers reply;
- requires debt collectors to take particular steps to reveal the existence of a debt to customers, orally, in writing, or electronically, earlier than reporting details about the debt to a client reporting company (CRA); and
- prohibits debt collectors from making threats to sue, or from suing, customers on time-barred debt.
The rule is efficient November 30, 2021.
Chunk #8 – Settled with a remittance switch supplier.
The CFPB settled with a remittance switch supplier for violations of the Digital Fund Switch Act (EFTA) and the Remittance Switch Rule. The CFPB claimed that, for the reason that 2013 efficient date of the Remittance Switch Rule, the supplier engaged in “1000’s of violations” of the Remittance Switch Rule. Particularly, based mostly on its investigation, the CFPB claimed that the supplier violated the EFTA and the Remittance Switch Rule by:
- failing to honor cancellation requests and failing to refund sure charges and taxes when funds weren’t obtainable on time;
- failing to keep up applicable error decision insurance policies and procedures, to stick to error decision necessities, and to supply customers with experiences of investigation findings; and
- failing to deal with worldwide invoice pay providers as remittance transfers and to make correct disclosures in quite a few cases.
The CFPB imposed a $750,000 civil cash penalty.
Chunk #7 – Settled with an auto creditor.
The CFPB settled with an auto creditor over violations of the Truthful Credit score Reporting Act (FCRA). The CFPB claimed that the creditor violated the FCRA and its implementing regulation, Regulation V, by:
- furnishing client account data to CRAs that it knew or fairly ought to have identified was inaccurate, together with failing to furnish correct data concerning whether or not accounts had been open or closed and whether or not customers had been carrying a stability or obligated to make future funds;
- failing to promptly replace and proper data it furnished to CRAs that it later decided was incomplete and failed to supply the date of first delinquency on sure delinquent or charged-off accounts; and
- failing to ascertain and implement cheap written insurance policies and procedures concerning the accuracy and integrity of the data supplied to CRAs.
These violations additionally constituted violations of the Shopper Monetary Safety Act. The consent order imposes a $4,750,000 civil cash penalty and requires the creditor to take sure steps to forestall future violations.
Chunk #6 – Settled with a scholar mortgage servicer.
The CFPB issued a consent order in opposition to a scholar mortgage servicer for violations of a previous CFPB consent order, the Digital Fund Switch Act (EFTA), and the Shopper Monetary Safety Act. The CFPB issued a consent order in 2015 in opposition to the servicer, based mostly on the CFPB’s discovering that the servicer misstated the minimal quantities due on billing statements in addition to tax data customers wanted to get federal earnings tax advantages, along with partaking in unlawful debt assortment practices.
On this settlement, the CFPB claimed that the servicer violated the CFPA (unfairness), the EFTA, and Regulation E by withdrawing funds from greater than 17,000 customers’ accounts with out legitimate authorization and by canceling or not withdrawing funds for greater than 14,000 customers with out notifying them. The CFPB additionally claimed that the servicer violated the CFPA (deceptiveness) by misrepresenting to greater than 100,000 customers the minimal cost owed and to greater than 8,000 customers the quantity of curiosity paid. Some customers ended up paying greater than they owed, others grew to become delinquent as a result of they may not pay the overstated quantity, whereas others could have filed inaccurate tax returns.
The servicer should pay a $25 million penalty and at the least $10 million in client redress.
Chunk #5 – Launched the Taskforce report.
The CFPB Taskforce on Federal Shopper Monetary Legislation, chartered in January 2020, examined the present authorized and regulatory setting going through customers and monetary providers suppliers by partaking with exterior stakeholders, together with client advocates, the CFPB’s mixed advisory boards, state and federal regulators, and business. The Taskforce’s two-volume report discusses what it discovered throughout its examination and outreach to stakeholders and affords suggestions for the way forward for client monetary safety.
In its report, the Taskforce makes roughly 100 suggestions to the CFPB, Congress, and state and federal regulators to strengthen client safety associated to:
- Various knowledge
- CFPB group
- Shopper credit score reporting
- Shopper empowerment
- Value-benefit and CFPB actions evaluation
- Deposit accounts
- Digital signature and doc necessities
- Emergency authority
- Equal entry to credit score
- Monetary inclusion
- FinTech regulation
- Regulatory coordination
- Regulatory ideas
- Small-dollar credit score
Please join our colleagues Lucy Morris and Jean Noonan on Thursday, January 28 for a webinar that ought to present an important perspective for deciphering the report and assist you give attention to the suggestions that would have probably the most impression on your corporation in 2021 and past.
Chunk #4 – Sued a mortgage lender.
The CFPB sued a mortgage lender for alleged violations of the Fact in Lending Act (TILA), the Truthful Credit score Reporting Act (FCRA), the Equal Credit score Alternative Act (ECOA), the Mortgage Acts and Practices—Promoting Rule (MAP Rule), and the Shopper Monetary Safety Act (CFPA).
The CFPB alleged that the mortgage lender violated TILA and Regulation Z by:
- utilizing unlicensed staff to interact in mortgage-origination actions and interactions with customers that required them to be licensed below state legislation; and
- requiring customers to submit paperwork verifying data regarding the buyer’s residential-mortgage-loan utility earlier than offering them a Mortgage Estimate.
The CFPB additional alleged that the lender’s use of unqualified gross sales staff to deprive customers of crucial, correct, and well timed mortgage data was an unfair apply below the CFPA. The CFPB alleged that the lender’s staff denied credit score to customers based mostly on data of their client report or in response to their utility however didn’t give customers the “opposed motion” discover required below FCRA and ECOA. The CFPB additionally alleged that the lender’s representatives engaged in deceptive representations, omissions, or practices towards customers in violation of the MAP Rule and CFPA, together with:
- whether or not staff had been licensed, mortgage-loan originators;
- whether or not the buyer had been preapproved or assured for a specific program or time period; and
- whether or not and on what phrases the buyer was prone to get hold of refinancing.
Chunk #3 – Settled with an internet lender.
The CFPB settled with an internet lender making single-payment and installment loans for violations of the Navy Lending Act (MLA). The CFPB particularly alleged that the corporate’s violations of the MLA included extending loans with an MAPR that exceeded the MLA’s 36% cap, extending loans that required debtors to undergo arbitration, and failing to make sure required mortgage disclosures, together with a press release of the relevant MAPR. The motion was a part of a broader CFPB sweep of investigations of a number of lenders that could be violating the MLA. The CFPB alleged that the web lender revamped 4,000 single-payment or installment loans to over 1,200 coated debtors in violation of the MLA.
The proposed settlement would:
- require the lender to supply $300,000 in redress to customers and to pay a $950,000 civil cash penalty;
- enjoin the lender from committing future violations of the MLA and from gathering on, promoting, or assigning any money owed arising from loans that didn’t adjust to the MLA; and
- require the lender to right or replace the data it supplied to client reporting businesses about affected customers.
Chunk #2 – Issued approval orders on dual-usage bank cards and earned wage entry merchandise.
The CFPB issued a compliance help sandbox (CAS) approval order to Synchrony concerning their proposal to develop a “dual-feature bank card.” The cardboard is designed for customers with a restricted or broken credit score historical past as a software that can be utilized to ascertain or reestablish a good credit score historical past. Synchrony intends to supply a decrease price on secured use with the chance for eligible account holders to graduate to unsecured use after 12 months. The phrases of each secured use and unsecured use might be disclosed on the opening of the dual-feature bank card account. The phrases will then be redisclosed with the chance to opt-in to unsecured use. The length of the approval, on this case, is 3 years. A replica of the CAS approval order issued to Synchrony might be discovered here.
The CFPB additionally issued a compliance help sandbox (CAS) approval order to PayActiv concerning particular facets of a few of its earned wage entry (EWA) merchandise. EWA merchandise enable staff entry to their earned however unpaid wages earlier than payday. The length of the approval, on this case, is 2 years. A replica of PayActiv’s CAS utility might be discovered here. A replica of the CAS approval order issued to PayActiv might be discovered here.
Chunk #1 – Director Kraninger resigned from her put up.
Upon request by the Biden Administration, CFPB Director Kathy Kraninger resigned from her put up on the CFPB. President Biden has tapped FTC Commissioner Rohit Chopra to steer the CFPB.
As well as, CFPB Deputy Director Tom Pahl retired earlier than President Biden’s inauguration, leaving one other senior put up to fill. Different political appointees and staff have additionally resigned. President Biden has named David Uejio, the CFPB’s Chief Technique Officer, because the performing director.