Four years ago, the CFPB was particularly active in the enforcement of the consumer finance laws and regulations. Enforcement slowed during the Trump Presidency. But, there is a new sheriff in town; and, it is time once again to focus on the types of activities that can get a lender or a credit seller into regulatory hot water.
I have been reviewing some of the CFPB Consent Orders concerning collection and credit reporting practices. The findings of fact and conclusions of law provide a constructive road map for what not to do. The following are common unfair acts or practices that will cause a creditor considerable problems:
- At home or at work collection activity—particularly if the consumer has instructed the creditor to cease and desist and the creditor fails to heed such.
- Intentional or unintentional disclosure of consumers’ delinquency to third parties, engendering humiliation and embarrassment or even jeopardizing employment.
- Calling third parties including consumers’ credit references, supervisors, landlords, or family members in a manner that risks disclosure of the existence of delinquent debt to such third parties when the creditor knows that the consumer or the third parties had previously requested that the calls cease.
- Failure to establish and implement policies and procedures regarding the accuracy and integrity of information required by the Fair Credit Reporting Act Furnisher Rule; particularly failing to notify the consumer reporting agency (CRA) of the date of the delinquency when reporting a delinquent account.
- Failure to implement other Metro 2 Guidance in monthly furnishing of information to the CRA.
Such violations can lead to civil money penalties and ongoing compliance monitoring by the CFPB.
Practice Pointer: It is time to review your collection practices and credit reporting practices to make certain that you not only follow the letter of the law, but its intent as well. The goal here is to avoid practices that the Bureau will consider a UDAAP—an unfair, deceptive or abusive act and practice.