CFPB Releases Supervisory Report Highlighting “Risky Practices” of Nonbanks

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The CFPB releasedreport regarding certain actions the CFPB discovered during its supervision of the payday, debt collection, and consumer reporting industries. The report, which covers the CFPB’s supervision of those industries between November 2013 and February 2014, notes that “many companies had systemic flaws in their compliance management systems.” With respect to payday lending, the CFPB found several problems, including: (1) lenders were allegedly deceiving consumers in the collection of debt; (2) lenders were harassing borrowers and engaged in workplace collection visits and (3) third-party debt collectors acting as service providers to creditors allegedly violated the Fair Debt Collection Practices Act and the Dodd-Frank Act’s prohibition on unfair, deceptive and abusive acts and practices (e.g., allegedly making false threats of litigation and referral for criminal prosecution). The report also found several issues regarding the debt collection industry, including, among others issues, failure to investigate consumer credit report disputes in violation of the Fair Credit Reporting Act. The report also notes that some consumer reporting agencies were improperly handling consumer credit report dispute documents and were encouraging consumers to file disputes online or by phone, but were then refusing to accept such disputes.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

Topics:  CFPB, Credit Reporting Agencies, Credit Reports, Debt Collection, FCRA, Industry Examinations, Payday Loans

Published In: Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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