On June 30, the CFPB published its ninth Semi-Annual Report to Congress covering supervisory and enforcement actions, rulemaking activities, newly designed consumer tools, and published reports from October 1, 2015 through March 31, 2016. The Semi-Annual Report provides an overview of relevant topics addressed in previous CFPB reports and bulletins, including monthly Consumer Complaint reports, Supervisory Highlights, and the February 2016 compliance bulletin regarding Regulation V. The report outlines, among other things, the CFPB’s (i) efforts to monitor the effectiveness of the SAFE Act; (ii) fair lending activities, including its risk-based fair lending prioritization process and recent public enforcement actions; and (iii) ongoing efforts to define larger participants in markets for consumer financial services and products which are subject to the Bureau’s supervisory authority. According to the report, the Bureau’s supervisory actions during the six month period covered in the report provided over $44 million in compensation to over 177,000 consumers, while enforcement actions in the same time period resulted in “approximately $200 million in total relief for consumers who fell victim to various violations of consumer financial protection laws, along with over $70 million in civil money penalties.”
On July 20, the CFPB published an overview of the consumer complaints it handled between July 2011 and July 2016. According to the overview, the CFPB has handled almost one million consumer complaints, the majority of which relate to either mortgages or debt collection. The CFPB has also handled a significant number of complaints related to the following: (i) bank accounts and services, most commonly about opening, closing, or managing bank accounts; (ii) credit cards, in particular billing disputes; and (iii) credit reporting, most often involving reporting errors in credit reports.
On June 21, New York AG Eric Schneiderman settled with a New York-based auto dealership to resolve allegations of deceptive sales and advertising practices. Specifically, AG Schneiderman alleged that the company charged consumers up to $5,000 for warranties and service contracts without their authorization and convinced consumers to purchase and finance vehicles on terms they could not afford, falsely promising to refinance the loans on more favorable terms in the subsequent months. In addition, the AG’s office received a number of consumer complaints alleging that the company (i) engaged in various bait and switch tactics, including crediting consumers for less than previously agreed on vehicle trade-ins; (ii) charged consumers a greater price for a vehicle than promised; (iii) charged consumers a higher interest rate on the auto loan than promised; (iv) falsely promised lower yearly mileage limits for lease contracts; and (v) forged consumer signatures on contracts. Pursuant to the settlement agreement, the company must pay restitution ranging from $198 for alleged illegal fee charges to more than $4,000 for unauthorized warranties and services contracts, for a total of more than $101,000 to 119 consumers. The settlement further requires that the company “pay restitution to other consumers who come forward within the next three months and who were subjected to the deceptive and illegal practices uncovered by the investigation, with a cap of $50,000.”
AG’s Schneiderman’s settlement comes after the New York State Police completed a raid and seizure of the company’s business records in May 2012. The company’s finance manager was subsequently arrested for second-degree Scheme to Defraud and third-degree Criminal Possession of a Forged Instrument.
On June 9, the CFPB released an auto loan worksheet designed to help consumers shop for an automobile loan. As part of its Know Before You Owe auto initiative (also known as the Take Control of Your Auto Loan initiative), the online worksheet is intended to help consumers: (i) understand the aggregate amount of the loan – not just the monthly payment – including the interest rate, optional add-ons, and certain fees; (ii) negotiate and compare between loan offers; and (iii) be mindful of how additional financing features, services, or add-ons, such as guaranteed auto protection insurance, extended warranties, and credit insurance, can increase the upfront cost of a loan. In addition to the auto loan worksheet, the CFPB’s Know Before You Owe auto initiative also contains a step-by-step guide designed to help consumers navigate the auto lending process.
The CFPB simultaneously released a report titled “Consumer Voices on Automobile Financing.” The report covers research related to direct and indirect auto financing, but does not address financing offered by “Buy Here Pay Here” dealers or leasing. Read more…
On May 24, the CFPB released its latest consumer complaint report. This month’s report highlights complaints related to credit reporting, noting that such complaints made up approximately 143,700 of the 882,800 total complaints that the CFPB has handled as of May 1. The report found, among other things, that: (i) credit reporting remains among the top three products complained about by consumers, with more than 4,500 complaints submitted in April alone; (ii) the three largest U.S. credit reporting companies are also the top three companies offering credit reporting services, accounting for 95% of the credit reporting complaints submitted between December 2015 and February 2016; and (iii) during that same time period, consumers also submitted more than 2,000 complaints involving specialty consumer reporting companies that provide reports in particular areas, including background and employment screening, checking account screening, rental screening, and insurance screening. According to the report, the most common types of credit reporting complaints have included the following: (i) inaccurate information appearing on credit reports, particularly information related to debt collection items and information resulting from identity theft; (ii) difficulty in correcting inaccuracies, including long delays, negative customer service experiences, and failed attempts to have inaccuracies removed; and (iii) the inability to access credit reports online due to overly burdensome identity authentication questions.