On February 23, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it has issued orders to nine of the largest auto lenders requesting information about their auto lending portfolios. According to the CFPB, the nine targeted lenders represent a cross-section of the auto finance market and the data collected in response to these orders will help the CFPB build a data set that provides them with insight into lending channels and loan performance. Notably, the CFPB stated that these collection efforts will inform potential future data collection orders.

These requests are not unexpected, as the CFPB first announced its intention to collect such data in November 2022 and has proceeded to collect public comments regarding the same over the past few months.

The CFPB issued these requests under its authority to monitor the auto finance market under 12 U.S.C. § 5511(c)(3) and not as a supervisory order or civil investigative demand. However, the CFPB expressly reserved the right to use the information gathered for any purpose permitted by law. The data requests are extensive and request information about originations, servicing, and repossessions over the past five years. The stated purpose for the requests is to help the CFPB better understand trends, changes in the marketplace, and how the components of auto loan transactions have changed over time.

The CFPB identified three areas where it believes the requested data will increase visibility into the market:

• Lending Channels
  • The data requests require lenders to identify whether each loan is direct or indirect.
• Data
  • According to the CFPB, thorough auto lending analyses are “nearly impossible” due to variations in existing data and the difficulty in creating a comprehensive data set from existing sources.
• Repossessions
  • Specifically, the CFPB requests information on the circumstances leading up to a repossession, and the impact of a repossession on the borrower and lender. The Bureau indicated it is interested in the potential correlation between delinquency and geography, credit score, and income.
  • The data requests also seek information about the kinds of technology used during repossession, such as GPS tracking and starter-interrupt devices.

We see a significant focus not only on repossessions in these requests, but also on “ability to repay” issues and the sale of ancillary products, both of which were featured issues in a recent enforcement action filed by the CFPB. These requests seem to indicate that auto finance will remain a front and center area of interest for the CFPB. Troutman Pepper will continue to monitor important developments involving the CFPB and the proposed data collection and will provide further updates as they become available.