Regulatory Recap: What’s Been Happening Lately with the CFPB?

regulations sign with paperclipsRead our recap of some of the CFPB’s recent bulletins and reports.

03/23/2023 1:30 P.M.

3.5 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 Publishes Findings on Buy Now, Pay Later Borrowers

The CFPB published a new report earlier this month analyzing the financial profiles of Buy Now, Pay Later (BNPL) borrowers. While many Buy Now, Pay Later borrowers use these products without noticeable indications of financial stress, the bureau’s report found that BNPL borrowers are more likely to be active users of other types of credit products like credit cards, personal loans and student loans.

Additionally, the report found they are also more likely to exhibit measures of financial distress than non-users. For example, BNPL borrowers are more likely to be highly indebted or have revolving balances or delinquencies on their credit cards compared to consumers who do not use BNPL products.

BNPL borrowers are also more likely to use high-interest financial services such as payday loans, pawn loans, and bank account overdrafts, according to the report.

“A common misconception of Buy Now, Pay Later borrowers is that they lack access to other forms of credit. Our analysis shows that these borrowers are more likely to use other credit products,” said CFPB Director Rohit Chopra. “Since Buy Now, Pay Later is like other forms of credit, we are working to ensure that borrowers have similar protections and that companies play by similar rules.”

Read the report here.

CFPB Orders TitleMax to Pay a $10 Million Penalty for Unlawful Title Loans and Overcharging Military Families

Last month, the CFPB took action against a web of corporate entities operating under TMX Finance, broadly known as TitleMax, for violating the financial rights of military families and other consumers in providing auto title loans.

The CFPB found that TitleMax violated the Military Lending Act by extending prohibited title loans to military families and by charging nearly three times over the 36% annual interest rate cap.

TitleMax tried to hide these activities by, among other things, altering the personal information of military borrowers to circumvent their protected status, according to the CFPB’s press release.

The CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. The CFPB’s order put an end to the entities’ actions and required the company to pay more than $5 million in consumer relief and a $10 million civil money penalty.

Read the CFPB’s order here.

CFPB and NLRB Announce Information Sharing Agreement on Employer-Driven Debt

Earlier this month, the CFPB and the National Labor Relations Board (NLRB) signed an information sharing agreement creating a formal partnership between the two agencies to “better protect American families and to address practices that harm workers in the ‘gig economy’ and other labor markets,” according to a press release from the bureau.

Two areas of immediate concern, according to the bureau, include employer surveillance and employer-driven debt. The agreement will help to identify and end financial practices that harm workers and to enhance the enforcement of federal consumer financial protection and labor laws and regulations.

“Many workers discover that getting a job can mean piling up debt instead of making a living,” said CFPB Director Rohit Chopra. “Information sharing with the National Labor Relations Board will support our efforts to end debt traps that stop workers from leaving one job for another.”

NLRB General Counsel Jennifer Abruzzo said, “Employers’ practices and use of artificial intelligence tools can chill workers from exercising their labor rights. As our economy, industries, and workplaces continue to change, we are excited to work with CFPB to strengthen our whole-of-government approach and ensure that employers obey the law and workers are able to fully and freely exercise their rights without interference or adverse consequences.”

The CFPB previously sought comment and information regarding employer-driven debt, ACA reported in August 2022, and wanted to know whether consumers have a meaningful choice in accepting employer-driven debt products.

Read the memorandum here.

Do you have an item to submit for the Regulatory Recap? Share it with us at [email protected], Attn: Lori Bowes.

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