CBA Submits Comments to CFPB on Debt Collection Rule:
On Wednesday, CBA submitted comments to the CFPB on their May, 2018 Notice of Proposed Rulemaking (NPR)
on the Federal Debt Collection Practices act (FDCPA). CBA’s comments emphasize the proposed rule should apply explicitly to third-party debt-collectors, as many of the rule’s provisions are not applicable, and are in fact harmful, to creditors seeking to collect their own debts.
CBA further advocated the Bureau should not impose “one size fits all” contact frequency limits, respect consumer preferences and not set distinctions between work and non-work email addresses and telephone numbers, require more specificity when consumers request not to be contacted at a certain time, ensure model validation notices do not come with loopholes deteriorating their “model” status and coordinate with the Federal Communications Commission (FCC) on potential TCPA issues with the Bureau’s proposed changes.
CBA has advocated on these principles and more since before the Bureau’s release of their NPR in May. CBA’s Default Management Committee
, led by Heather Bentley
of Citizens Financial
and Chris Rathsack
, have been instrumental in providing the Bureau with feedback and response throughout the process, meeting with the Bureau on three different occasions this year alone on the rulemaking. With over 10,000 comments submitted on the rulemaking so far, we expect the Bureau to release a final rule in late 2020.
CFPB Reverses Constitutionality Defense: CFPB Director Kathy Kraninger on Tuesday informed Congressional leaders the Bureau will no longer defend the constitutionality of its leadership structure.
CBA has long advocated for the creation of a bipartisan Commission at the CFPB to give certainty and stability to financial regulations.
Constitutional or not, Congress can end this circus once and for all by enacting a bipartisan, Senate-confirmed commission at the CFPB. The Bureau has been a political hot potato since day one and its mission is far too important for this chaos to continue.
CFPB Complaint Database Changes:
On Wednesday, CFPB Director Kathy Kraninger publicly announced changes are coming to the CFPB’s consumer complaint database. After meetings with consumer groups and industry advocates, including CBA, the Bureau has outlined a plan for improvements to the complaint database to make it more usable by both consumers and the industry.
Immediate changes will include the complaint database landing page as well as changes to the “Submit a Complaint” page that encourage consumers to work with their financial institution to address concerns prior to filing a complaint.
Prior to submitting a complaint, consumers will be provided with information to help assist in contacting their financial institution prior to submittal and will better integrate financial resources to address questions before the arise to a complaint. The pages will also include simplified disclosures that should be more easily understood by consumers than the disclosures currently live on the site.
The Director also outlined a plan to receive industry feedback on other methods to improve the consumer complaint database, including a commitment to:
- Build and launch dynamic visualization tools including geospatial and trend views based on recent complaint data to help users of the database understand current and recent marketplace conditions;
- Emphasize features for aggregation and analysis while continuing to make all the underlying data available for analysis;
- Explore expansion of a company’s ability to respond publicly to individual complaints listed in the database; and
- Continue to explore ways to put the complaint data in context of other data, such as by incorporating product or service market share and company size.
Finally, the Director has made a commitment to normalize data while finding a solution that works for all parties and indicated improvements to the database will come over the next year.
For too long, the Bureau’s unverified compliant database has functioned to paint a picture of guilt through government press releases and statements – despite the CFPB reporting the overwhelming majority of complaints being self-corrected by banks. These changes are an important first step in helping financial institutions better serve their customers and consumers’ needs are still heard.
More information on why changes to the database will make the system fairer is available here
CFPB Releases Supervisory Highlights
: The CFPB
late last week released its Summer 2019 Supervisory Highlights
focused on issues in automobile loan originations, credit card account management, debt collection, furnishing and mortgage originations.
- For automobile loan originations, the CFPB highlighted a 2018 case where a lender sold a guaranteed asset protection (GAP) product to consumers whose low loan-to-volume (LTV) meant the consumer would not benefit from the product.
- Multiple issues were raised in regard to credit card account management: triggered disclosures for online credit card advertisements, methods to offset credit card debt, deceptive threats of repossession in collections, and deceptive marketing regarding secured credit card accounts.
- In one or more examinations, examiners found entities failed to clearly and conspicuously provide disclosures required by triggering terms in online advertisements. Consumers were required to click through insufficiently clear hyperlinks and navigate through online applications before receiving any disclosures. These entities have since corrected these links.
- In a separate case, examiners found credit card issuers violated Regulation Z by offsetting consumers’ credit card debts against funds the consumer had on deposit with the issuers without sufficient indication of the consumer’s awareness of a security interest in those funds.
- In some instances, the issuers enforced a security interest against the funds on deposit where there was no affirmative confirmation of this interest by the consumer.
- Next, examiners found one or more credit card issuer misled or were likely to mislead consumer credit card holders by sending collection letters that suggested the issuers could repossess consumers’ automobiles or foreclose on homes, securing loans or mortgages owned by the issuers.
Finally, for credit cards, examiners found credit card issuers misled or were likely to mislead consumers by representing in prescreened offers of credit that secured credit card accounts subject to an annual fee would be periodically reviewed for upgrade.
Debt collection is once again highlighted in the supervisory highlights, with examiners finding one or more debt collectors claimed and collected forms from consumers, interest not authorized by the underlying contracts between the debt collectors and creditors.
For furnishing, the CFPB highlighted issues with a duty to timely complete dispute investigations, duty to provide results of dispute investigations to CRCs, duty to promptly correct and update previously furnished information, and duty to provide notice of dispute. These issues arose from entities failing to provide various information required under FCRA to CRC and consumers.
Finally, for mortgage originations, the Bureau found creditors disclosing inaccurate APRs for closed-end reverse mortgages, with creditors using a unit-period of one month instead of six to calculate APRs, leading to inaccurate calculations outside of Regulation Z’s permissible tolerances.
The CFPB also underlined recent supervision program developments, citing their updated small entity compliance guide, memorandum of understanding with the FTC, and the amendment of the annual privacy notice under the GLBA.