The report provides compliance takeaways for the accounts receivable management industry to consider.
In its latest Supervisory Highlights report, the Consumer Financial Protection Bureau shares findings from its supervisory work “to help industry limit risks to consumers and comply with Federal consumer financial law.”
The report includes “supervisory observations” based on findings from CFPB examinations completed between September 2019 and December 2019, and covers consumer credit reporting, debt collection, deposits, fair lending, mortgage servicing and payday lending. In addition, the report presents supervisory program developments and guidance related to COVID-19; the CFPB’s policy regarding abusive acts or practices; responsible business conduct; innovation; and the pilot advisory opinion program.
The report “does not impose any new or different legal requirements.” It expressly notes that “legal violations described in [the report] are based on the particular facts and circumstances reviewed by the bureau as part of its examinations,” but a conclusion that a legal violation exists on a given set of facts and circumstances “may not lead to such a finding under different facts and circumstances.”
Highlighting its May 2020 “consumer complaint bulletin,” the CFPB noted that it received a record number of complaints in April and May of 2020—up 26% and 53%, respectively, from the 2019 monthly average of 29,000—and observed that 4,500 (5.7%) of the complaints that it received in April and May included “COVID-related terms.” Mortgage and credit card companies topped the list of complaints that mentioned coronavirus or related terms. The bulletin also shows debt collectors continued to help consumers manage their payments and provide resources on hardship programs and provide solutions that fit with their financial situation.
The Supervisory Highlights provide an overview of the CFPB’s pilot advisory opinion (AO) program, launched in June 2020. The AO program allows covered persons or service providers that are subject to the bureau’s authority “to submit a request where uncertainty exists.” Under the AO pilot program procedures, the CFPB then selects topics “based on the program’s priorities” and makes the responses available to the public. ACA International filed comments on the program welcoming the bureau’s acknowledgment that providing clear and useful guidance to regulated entities is an important aspect of facilitating markets that serve consumers.
Other important takeaways from the Supervisory Highlights report include:
The bureau reviews requirements for entities that obtain or use consumer reports from consumer reporting companies (CRCs) or that furnish information to CRCs for inclusion in consumer reports. They are subject to several requirements under the Fair Credit Reporting Act and its implementing regulation, Regulation V, including the requirement to only obtain or use reports for a permissible purpose, and to furnish data subject to the relevant accuracy and dispute handling requirements, according to the supervisory highlights report. In one or more recent furnishing reviews, examiners found deficiencies in user and furnisher compliance with FCRA permissible purpose, accuracy, and dispute investigation requirements that provide compliance takeaways.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bureau has the supervisory authority to examine certain entities that engage in consumer debt collection activities, including nonbanks that are larger participants in the consumer debt collection market.
For example, in one of the CFPB’s examinations, it found that one or more debt collectors reportedly “falsely threatened consumers with lawsuits that the collectors could not legally file or did not intend to file, in violation of Section 807(5)” of the FDCPA. “Examiners also determined that one or more debt collectors made false representations regarding the litigation process and a consumer’s obligations in the event of litigation, in violation of Section 807(10)” of the FDCPA. In response to these findings, the debt collectors are making changes to their training, scripts, monitoring and other compliance processes, according to the report.
The CFPB’s examiners also evaluated credit reporting actions by debt collectors resulting in training and monitoring updates by the companies.
Supervisory Program Developments
The bureau summarizes its supervisory program developments, including compliance bulletins and rules issued since the last report was released in February.
- On March 6, 2020, the Federal Financial Institutions Examination Council on behalf of its member agencies published updated guidance identifying actions that financial institutions should take to minimize the potential adverse effects of a pandemic. The statement noted that financial institutions should periodically review related risk management plans, including business continuity plans, to ensure that they are able to continue to deliver products and services in a wide range of scenarios with minimal disruption.
- On April 1, 2020, the bureau released a statement that outlined the responsibilities of CRCs and furnishers during the COVID-19 pandemic. The statement noted that the CARES Act requires lenders to report to CRCs that a consumer is current on their loans if the lender has provided the consumer with payment relief in certain circumstances. In addition, the bureau noted temporary and targeted flexibility in its supervisory and enforcement approach for lenders and CRCs facing challenges as a result of the COVID-19 pandemic in the time they take to investigate disputes. The bureau stated that it will consider a furnisher’s or CRC’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against firms impacted by the pandemic who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.
Read the complete Supervisory Highlights report from the bureau here.
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