Regulatory Recap: CFPB, Department of Justice Issue Reminders on Servicemember Protections; Bureau Releases Debt Collection FAQs

regulatory recapRead our recap of some of the CFPB’s enforcement actions and research reports in the last week, including an update on medical debt credit reporting and debt collection guidance.

08/04/2022 1:30 P.M.

3 minute read

The Consumer Financial Protection Bureau continues to issue enforcement actions, research reports and compliance reminders weekly—if not daily.

Here are a few of the bureau’s updates to know about this week:

Reminder on Servicemember Protections Under the Servicemembers Civil Relief Act

The CFPB and U.S. Department of Justice (DOJ) issued a letter in late July to remind auto lenders and leasing companies (collectively, auto finance companies) of the protections offered to servicemembers and their dependents under the Servicemembers Civil Relief Act (SCRA), which provides servicemembers and their dependents with certain financial and due process protections during periods of military service. The SCRA includes several protections related to auto lending and leasing, which are particularly important given that many servicemembers carry significant auto loan debt at young ages due to the need for transportation while living on military bases. The agencies specifically highlighted provisions related to vehicle repossessions, penalty-free lease terminations and auto loan interest rate limits. They also reminded recipients of efforts by the CFPB and DOJ to ensure compliance and protect consumers.

Debt Collection FAQs; Medical Debt Report

The Consumer Financial Protection Bureau has added a new section to the Debt Collection Rule Frequently Asked Questions (FAQs) compliance aid.

The new FAQs address questions related to electronic communications, electronic communication opt-out notices and unusual or inconvenient time and place provisions in Reg F.

Last year, the bureau released the FAQs as a compliance aid on Reg F, ACA International previously reported.

Last week, the bureau published an analysis of potential impacts of the changes enacted by the three national credit reporting agencies (CRAs). The report continues to cite outdated information rather than waiting for data available to reflect the impact of the CRAs’ medical debt credit reporting changes in the next year, ACA previously reported.

Fine for Mortgage Company’s Alleged Violations of the Equal Credit Opportunity Act

The CFPB and DOJ filed a complaint against Trident Mortgage Company for alleged violations of the Equal Credit Opportunity Act and “intentional discrimination against families living in majority-minority neighborhoods in the greater Philadelphia area,” according to a news release.

The CFPB and DOJ allege Trident redlined majority-minority neighborhoods through its marketing, sales, and hiring actions. Specifically, Trident’s actions discouraged prospective applicants from applying for mortgage and refinance loans in the greater Philadelphia area’s majority-minority neighborhoods. If entered by the court, the settlement, among other things, would require Trident to pay a $4 million civil penalty to the CFPB to use for the CFPB’s victims’ relief fund. The attorneys general of Pennsylvania, New Jersey, and Delaware also finalized concurrent actions.

In a press conference with the DOJ on the enforcement action, CFPB Director Rohit Chopra said, “Enforcement alone is not the answer. It’s also important to increase the resources available to states that support their supervision and regulation of nonbank lenders. One area where many states are expanding their own fair lending toolboxes is through community reinvestment laws. Recognizing the limits of federal law, Illinois, Massachusetts, and New York all have state versions of the Community Reinvestment Act that obligate both banks and nonbanks to meet state requirements for investments in underserved communities.”

Report on Buy Now, Pay Later Products

The CFPB issued a report exploring the implications of the buy now, pay later market and examining the development of new offerings that may blur the traditional lines of banking and commerce. The bureau is focused on how large technology platforms and other emerging business models that operate outside of the traditional banking system use consumers’ sensitive spending and transaction data. The bureau said its goal is to preserve the benefits of real-time payments, while still ensuring that the payments ecosystem in the U.S. is fair, transparent, and competitive, according to a news release.

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