On April 25, the CFPB announced that it is using its “dormant authority” in order to conduct examinations of nonbanks posing risks to consumers.  The Bureau has direct supervisory authority over banks and credit unions, certain nonbanks, in addition to large depository institutions with more than $10 billion in assets, and their service providers.  With this announcement, the CFPB intends invoke its authority under the Dodd-Frank Act to examine nonbanks “whose activities the CFPB has reasonable cause to determine pose risks to consumers. This authority is not specific to any particular consumer financial product or service.”
Continue Reading FinTechs in Crosshairs as CFPB Invokes Dormant Authority to Examine Nonbanks

On April 21, the CFPB and New York Attorney General’s Office filed a complaint against a remittance provider alleging that the provider (i) repeatedly gave senders inaccurate information about when their remittance transfers would be available to recipients abroad; (ii) repeatedly failed to provide the investigations, responses, or remedies required when consumers complained of remittance-transfer errors; and (iii) failed to comply with policy-and-procedure and document-retention requirements.  The complaint also alleges that the company engaged in unfair acts and practices by failing to timely make remittance transfers available to recipients or to timely make refunds available to senders. The complaint alleges that the these actions violated the Electronic Funds Transfer Act and its implementing Regulation E and the Remittance Rule and the Consumer Financial Protection Act, among various consumer financial protection laws.
Continue Reading CFPB and NY AG Sue Remittance Provider, citing “Repeat Offender”

This week, CFPB Director, Rohit Chopra, appeared before the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Committee on Financial Services in conjunction with the CFPB’s submission of its Semiannual Report to Congress.  In his prepared testimony before both committee, the Director highlighted some of the CFPB’s work over the past six months, which includes:
Continue Reading CFPB Director Testifies Before Congress

On April 15, the CFPB and FTC announced the release of a joint annual report to Congress administering the Fair Debt Collection Practices Act (FDCPA).  The annual report highlights both agencies’ efforts to protect and provide debt collection relief to consumers, particularly in light of the COVID-19 pandemic and resulting economic hardship.
Continue Reading CFPB Signals Foray into Protecting Small Businesses from Abusive Debt Collectors

Recently, CFPB Director Rohit Chopra spoke at a joint meeting of the CFPB’s Community Bank Advisory Council and Credit Union Advisory Council in which he expressed concerns that core service providers that many small banks and credit unions rely on “have too much power in the system.”  Despite providing core banking functions such as deposit taking, payment facilitation, and loan origination, the Director notes that local banks and credit unions report dissatisfaction with providers in their innovation speeds, product roll-outs and third-party compatibility, and tech sophistication.
Continue Reading CFPB Director Critical of Small Bank Core Service Providers

On April 12, the CFPB filed a complaint against a credit reporting agency (CRA), two of its subsidiaries, and a former senior executive for violating a 2017 consent order issued to the company related to alleged deceptive marketing regarding its credit scores and other credit-related products.  The CFPB alleges that the CRA continued its unlawful behavior and employed deceitful digital “dark patterns” to profit from customers and also alleges violations of the CFPA, EFTA/ Regulation E, and the FCRA/Regulation V.  The order seeks a permanent injunction, damages, civil penalties, consumer refunds, restitution, disgorgement and the CFPB’s costs.
Continue Reading CFPB Sues Credit Reporting Agency and Former Senior Executive

On March 30, the CFPB settled with a student loan servicer to resolve allegations that the servicer made deceptive statements to student loan borrowers and misrepresented their forgiveness and repayment options, including deceiving borrowers with Federal Family Education Loan Program (FFELP) loans about their eligibility for Public Service Loan Forgiveness (PSLF).  The consent order requires the servicer to pay a $1 million civil money penalty.
Continue Reading CFPB Fines Student Loan Servicer $1 Million to Settle Alleged UDAAP Violations

On March 22, HUD announced the delivery of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Biden.  The PAVE Action Plan outlines actions that are intended to substantially reduce racial bias in home appraisals, and to promote generational wealth creation through home ownership.  According to the Task Force’s executive summary, “[o]n average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents.”  The PAVE Task Force is composed of thirteen federal agencies and offices.
Continue Reading Interagency Task Force Unveils Action Plan to Address Racial Discrimination in Home Appraisals

On March 22, the CFPB issued Compliance Bulletin 2022-05 regarding potentially illegal practices related to consumer reviews.  The guidance states that consumer reviews impact company revenue and help consumers choose between financial providers, which can in turn “incentivize dishonest market participants to attempt to manipulate the review process, rather than compete based on the value of their services, which can frustrate a competitive marketplace.”
Continue Reading CFPB Flexes UDAAP Muscle Over Contractual “Gag” Clauses and Fake Consumer Reviews

In a significant move, the CFPB announced on March 16 a revision to its supervisory operations to address discrimination outside of the traditional fair lending context, with future plans to scrutinize discriminatory conduct that violates the federal prohibition against “unfair” practices in such areas as advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination.  Specifically, the CFPB updated its Exam Manual for Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) noting that discrimination may meet the criteria for “unfairness” by causing substantial harm to consumers that they cannot reasonably avoid.
Continue Reading Regulation by Definition: CFPB Broadens Definition of “Unfairness” to Rein in Discrimination