Home Consumer debt CFPB Bites of the Month – August’s Top 10 | Hudson Cook, LLP

CFPB Bites of the Month – August’s Top 10 | Hudson Cook, LLP


In this month’s Top 10 article, we share some of our best “bites” from the previous month covered during the August 17, 2022 webinar.

So what happened last month?

Bite #10Extra Bite: Global payments company plans to appeal deception decision

In an August 9 ruling, federal court for the Northern District of Georgia granted the FTC’s motion for summary judgment in a case involving a multinational payments company and its CEO. According to the FTC, the payment company claimed that its business customers would save on costs, but did not save as promised by using the company’s cards. The company said it strongly disagrees with the ruling on liability and plans to appeal the judgment. The court denied the FTC’s claim for monetary relief.

Bite #9: The CFPB analyzed the impact of changes in the credit report on medical debts

On July 27, the Consumer Financial Protection Bureau (CFPB) issued a analysis Address changes made by national consumer reporting agencies that will affect people with unpaid medical debt. Specifically, beginning in 2023, commercial medical collection lines under $500 will no longer be reported on consumer credit reports. However, according to the CFPB, nearly half of all consumers with medical collections on their credit report will continue to see them after the changes take full effect next year. The CFPB also said consumers living in northern and eastern states are more likely to benefit from the changes.

Bite #8: The CFPB published a report on innovations in payments, including the BNPL

On August 4, the CFPB published a report discuss emerging payment systems and their ability to collect user data. The report discusses the growing presence of Buy Now, Pay Later (BNPL) offers, in-app commerce and in-app “super apps”. According to the CFPB, these technologies have “the potential to streamline payments, facilitate commerce and improve user experience”. But, the CFPB warned that they can “create more opportunities for businesses to aggregate and monetize consumer financial data, and for big players to dominate the financial and business lives of consumers.” The CFPB also warned that “while a range of payment capabilities creates more options for consumers, varying regulatory requirements can lead to regulatory arbitrage.” The CFPB concluded the report by noting that it will propose rules on “financial data rights”, assess BNPL to decide whether regulatory interventions are appropriate, and assess ways to protect consumers in real-time payments.

Bite #7: The CFPB and the DOJ have issued a warning regarding the protection of military personnel

On July 29, the Department of Justice (DOJ) and the CFPB issued a joint statement letter reminding auto finance companies of the legal protections for military families under the Military Civilian Assistance Act. The letter discussed wrongful repossessions, termination penalties and interest rate benefits. The letter reminded automakers that it was their responsibility to identify whether borrowers were protected against repossession and included links to the Department of Defense website to verify a borrower’s military status, as well as information about the DOJ Military and Veterans Initiative and the CFPB office. military affairs.

Bite #6: The CFPB has issued a circular on data security practices

On August 11, the CFPB published a circular reminding regulators that financial firms violate federal law when they fail to protect consumer data. The circular provides guidance to other regulators, outlining examples of circumstances in which organizations can be held accountable for data security protocols. According to the circular, liability may be incurred for failure to implement multi-factor authentication, inadequate password management and failure to update software in a timely manner.

Bite #5: Behavioral targeting of individual consumers can create liability

On August 10, the CFPB published a rule of interpretation and Director Rohit Chopra gave a related speech to the National Association of Attorneys General. The rule of interpretation and discourse concerned digital marketing by big tech companies. According to the CFPB, digital marketers are not exempt from consumer financial protection law and can be held liable for “unfair, deceptive or abusive acts”. Under the rule of interpretation, digital marketers provide material services to financial firms and are subject to consumer protection enforcement. As service providers, they are liable for violations of consumer protection laws.

Bite #4: CFPB needed savings app to pay $2.7 million

On August 10, the CFPB issued a Consent order against a fintech company that the CFPB says used a flawed algorithm resulting in overdrafts and overdraft penalties for consumers. The company came up with an app that was promoted as a way to save money. But, according to the CFPB, the company falsely guaranteed no overdraft fees, broke promises to correct its mistakes and pocketed some of the interest that should have gone to consumers. The order requires the company to pay consumers redress and pay a $2.7 million civil penalty to the CFPB.

Bite #3: Consent order compels auto company to pay $19.2 million

On July 26, the CFPB issued a consent order and fined the finance arm of an auto company $19.2 million to resolve CFPB allegations that the company provided inaccurate consumer credit information. The CFPB says the company provided credit bureaus with “inaccurate account information” about consumers’ payment history. The consent order requires the automaker to take steps to prevent future violations, pay consumers $13,200,000 in reparations and a civil penalty of $6,000,000. The automobile company consented to the settlement without admitting the findings of material fact or the findings of law.

Bite #2: The mortgage company will pay more than $22 million

On July 27, the CFPB and the DOJ deposit a complaint and a proposed settlement order to resolve the allegations against a mortgage loan originator. The CFPB and DOJ allege that the company engaged in unlawful discrimination based on race, color, or national origin against candidates and potential candidates, including by (i) highlighting majority minority neighborhoods in the Philadelphia Metropolitan Statistical Area and (ii) discouraging potential applicants from applying for credit in violation of the Equal Credit Opportunity Act, Regulation B, and the Consumer Financial Protection Act . The DOJ also alleges that the mortgage company violated the Fair Housing Act.

According to the CFPB complaint, the company’s loan officers sent and received emails containing racial slurs and racist content. The company also reportedly avoided sending loan officers to market in majority minority neighborhoods and developed marketing that discouraged and ignored minority mortgage applicants.

If a court approves the proposed consent order, the company will have to invest $18.4 million in a loan subsidy program under which the mortgage company will contract with a lender to increase credit in neighborhoods. majority shareholders of the Philadelphia MSA and make loans under the Loan Subsidy Fund. This lender must also maintain at least four licensed branches in majority-minority neighborhoods of MSA Philadelphia. The company would also be required to fund targeted advertising to generate credit inquiries from qualified consumers in majority-minority neighborhoods in Philadelphia’s MSA and take other corrective actions to meet the credit needs of majority-minority neighborhoods. of the Philadelphia MSA. The company would also be required to pay a civil penalty of $4 million.

Bite #1: CFPB fined national bank $37.5 million over alleged fake accounts

On July 28, the CFPB issued a consent order against a major national bank for allegedly accessing credit reports and opening various accounts without authorization in violation of the Fair Credit Reporting Act, the Truth in Lending Act and the Truth in Savings Act. The CFPB claims that the bank has pressured its employees to meet sales targets, thereby pressuring them to misuse customer information. As a result, the bank will be required to waive and return the related fees and costs to customers, in addition to paying a $37.5 million penalty to the CFPB.