Catch up on some of the CFPB’s recent bulletins and reports.
04/21/2023 2:15 P.M.
2.5 minute read
The Consumer Financial Protection Bureau continues to issue enforcement actions, research reports and bulletins on a regular basis.
Here are a few of the bureau’s updates you should know about this week:
CFPB to Hold Field Hearing on ‘Zombie Debt’
On Wednesday, April 26, 2023, the CFPB will travel to Brooklyn, New York, where Director Rohit Chopra will moderate a discussion about “zombie” second mortgages—debts that consumers believed were settled years ago by loan modifications or bankruptcy proceedings or that were written off by lenders as uncollectable—and other debt collection issues. Chopra will be joined by community organizations, advocates, leaders and members of the public.
CFPB Tackles Increasing Credit Card Fees and Debt
As credit card issuers continue to hike rates, the CFPB is working across the board to make sure that Americans can shop in a competitive market and reduce their costs, according to a release from the bureau.
Average interest rates on credit cards have increased to almost 20%, a significant increase over previous years. The CFPB predicts that the amount of outstanding credit card debt may continue to rise and may potentially reach $1 trillion, given the patterns of the 175 million Americans who have credit cards.
In February, the bureau proposed an amendment to a rule provision implemented by the Federal Reserve Board of Governors in 2010 that credit card issuers have used to circumvent a congressional ban on unreasonable or excessive penalty fees. The loophole has allowed certain credit card issuers to charge larger fees even when a borrower is just one day late, according to the release.
The comment period on this proposed rule has been extended to May 3, 2023.
Additionally, in March, the CFPB announced updates to its credit card database, which is powered by a survey of credit issuers that reveals terms and pricing. The updates intend to create a neutral data source to facilitate comparison shopping for consumers looking to refinance their credit card debt.
CFPB Issues Policy Statement on UDAAP in Consumer Financial Markets
A recent policy statement from the CFPB outlines the prohibition of “abusive conduct” in consumer financial markets and a framework for federal and state regulators to identify such conduct, ACA previously reported.
Additionally, the policy statement indicates how this abusive conduct includes “obscuring important features of a product or service or leveraging certain circumstances—including gaps in understanding, unequal bargaining power, or consumer reliance—to take unreasonable advantage. In particular, the statement describes how the use of dark patterns, set-up-to-fail business models like those observed before the mortgage crisis, profiteering off captive customers, and kickbacks and self-dealing can be abusive.”
Read the CFPB’s complete policy statement here. It will also be published in the Federal Register and available for public comments until July 3, 2023.
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