Spring 2022 Supervisory Highlights Part I: Auto servicing, consumer reporting, credit card account management, debt collection, and deposits
The Consumer Financial Protection Bureau (CFPB) recently released its Supervisory Highlights covering issues arising during examinations between July 2021 and December 2021. The CFPB issues the Supervisory Highlights twice a year to provide insight on various compliance pitfalls and examination trends. The CFPB discusses auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittances, and student loan servicing in this issue. This compliance blog will provide an overview of the first set of topics, including auto servicing, consumer reporting, credit card account management, debt collection, and deposits.
Auto Servicing
The CFPB found consumers were the victim of wrongful repossession practices by auto servicers. The wrongful repossession of vehicles ultimately had a negative ripple effect on consumer welfare as consumers suffered from missed work, harmful credit reporting, repossession fees, and other negative consequences. The CFPB found such injuries were not avoidable as the “consumers had taken action they believed would halt repossession and there was no additional action the consumer could take to prevent the repossession.” In other words, consumers had limited avenues of relief.
Examinations by the CFPB also found auto servicers were allowing consumers to participate in deceptive payment programs that allowed consumers to defer payments that then increased the consumer’s final payment. The representation and communication auto servicers made to consumers regarding the deferred payments and their effects on the final payment lacked clear language, which led consumers to wrongly interpret the situation. As a result, auto servicers have updated disclosure language and practices.
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