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  • CFPB Releases Biennial Credit Card Report

    Consumer Finance

    On December 27, the CFPB released its biennial report on the state of the U.S. credit card market, finding that the total amount of credit lines, the total number of credit accounts, the total number of enrollments in online services, and the total amount of debt have increased since 2015. The report also found that the overall credit card cost to consumers has “proved largely stable” since 2015. Among other things, the report concludes:

    • The total amount of credit lines has increased steadily since the recession but still remains below the mid-2008 high of $4.4 trillion.
    • Over the last two years, credit card debt averages have increased by more than nine percent.
    • Credit card originations have increased by roughly 50 percent since 2010 but still remain below pre-recession volumes.
    • More than 60 percent of active credit card accounts enroll in online services.

    Consumers average fewer credit cards than before the recession, and more consumers are signing up for secured credit cards.

    Consumer Finance CFPB Credit Cards

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  • CFPB Ombudsman’s Office Publishes Fiscal Year 2017 Annual Report

    Consumer Finance

    The CFPB’s Ombudsman’s Office published its annual report to the Director for fiscal year 2017, entitled Advocating for Fair Process in Consumer Financial Protection. The December 6 report details Ombudsman initiatives undertaken in 2017 and highlights the Bureau’s selection as one of four case studies in a December 2016 study by the Administrative Conference of the United States (ACUS) on the use of ombudsmen in federal agencies. Specifically, the Bureau’s report focuses on systemic reviews concerning the following: (i) the accessibility of CFPB print materials for different groups of people; (ii) the telephone entry point for non-consumers; (iii) the documenting and standardizing of ex parte communications regarding proposed rules; and (iv) the implementing of improvements to the way consumers select categories when identifying issues with companies in the consumer complaint database.

    The Ombudsman’s report also outlines strategic goals for the next two years, including, among other things, (i) addressing CFPB process issues facing consumers, financial entities, and trade groups; (ii) optimizing resources for effective assistance; and (iii) expanding educational efforts and engagement with stakeholders, in addition to implementing best practices to convey feedback. 

    Consumer Finance CFPB Consumer Complaints

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  • FTC Announces Settlement With Debt Collection Operation

    Consumer Finance

    This week, the FTC obtained a court order banning a Florida-based debt collection operation and its managing member from the debt collection business. The defendants were accused of violations of the FTC Act and the Fair Debt Collections Practices Act for, among other things, allegedly posing as lawyers and threating individuals with lawsuits or prison time if they failed to pay debt they did not actually owe. The order resolves a complaint filed by the FTC in July against defendants. (See previous InfoBytes coverage here.) Under the terms of the settlement, the defendants are prohibited from, among other things, (i) engaging in debt collection activities; (ii) misrepresenting material facts regarding financial-related products or services; (iii) disclosing, using, or benefiting from consumers’ personal information; and (iv) improperly disposing such information when appropriate. Finally, the order assessed a $702,059 judgment for equitable monetary relief. 

    Consumer Finance FTC Debt Collection Settlement

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  • FTC Seeks Order to Stop Alleged Telemarketing Debt Relief Scam

    Consumer Finance

    On December 4, the FTC announced that it charged two debt relief companies and five individuals with violations of the FTC Act and the Telemarketing Sales Rule (TSR) in connection with their sale of “bogus” credit card interest rate reduction services. According to the complaint, the defendants contacted consumers using illegal robocalls and made false guarantees to “substantially and permanently” lower the consumers’ credit card interest rates and/or save the consumer thousands of dollars in interest payments. However, the scheme rarely obtained the promised results. In some instances where consumers did get lower interest rates, those rates were only temporary “teaser” rates that did not result in a permanent rate reduction. In addition, defendants failed to disclose the associated balance transfer fees that accompanied the lower teaser rates. The FTC also charged the defendants with TSR violations for (i) collecting illegal upfront fees; (ii) making illegal robocalls; (iii) contacting consumers on the National Do Not Call Registry; and (iv) not paying the required fees to the Registry. The FTC charged one additional individual defendant with substantially assisting the two debt relief operations with the allegedly illegal conduct. The FTC is seeking a temporary restraining order (TRO) against the defendants, requesting the appointment of a receiver to control the two corporate entities, and an asset freeze to assist in potential consumer redress.

    Consumer Finance FTC Credit Cards Debt Settlement Telemarketing Sales Rule

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  • Fed Fines Kansas State Bank for Alleged Deceptive Mortgage Acts

    Consumer Finance

    On November 28, the Federal Reserve Board (Fed) announced it had entered into a consent order with a Kansas state bank over allegations that the bank engaged in deceptive mortgage origination practices in violation of the FTC Act. Specifically, the order alleges that the bank told borrowers that they were paying for discount points that would lower their interest rate, but did not in fact provide those borrowers an interest rate reflective of the price paid for the discount points or, in some cases, a reduced rate at all. The Fed’s order requires the bank to pay restitution to the affected borrowers, but did not impose a further civil money penalty. The bank has decided to terminate all operations of its national mortgage business by year-end 2017.

    Consumer Finance Federal Reserve Mortgages FTC Act Settlement

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  • CFPB Releases Report on Consumers’ Overdraft Experiences

    Consumer Finance

    On November 21, the CFPB released a report summarizing findings from a qualitative study about consumers’ experiences with overdraft programs. The study consisted of one-on-one interviews by telephone with 88 individual consumers from May 2014 through June 2014 (the report does not comment on the three-year gap between the interviews and the release). According to the CFPB, the study was not designed to identify systematic trends but instead to provide an in-depth review of consumers’ experiences. The report concluded that consumers need a wide range of educational resources to support the varying experiences and perceptions they have with overdraft services. For example, the report notes that while some consumers commented on unexpected overdraft fees after miscalculating the timing of transaction processing, others noted their intentional use of overdraft options to make purchases or pay bills. The CFPB encouraged financial educators to develop their own overdraft resources with the awareness that consumers may use and interpret programs in varying ways and provided a list of CFPB resources available for use.

    Consumer Finance CFPB Overdraft Consumer Education

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  • CFPB Reports on Financial Institution Outreach to Limited English Proficient Consumers

    Consumer Finance

    On November 22, the CFPB released a report focusing on ways financial institutions can expand and improve services to Limited English Proficient consumers (LEP consumers) who often face challenges related to language access and financial literacy. According to findings in the report, LEP consumers often have trouble accessing and interpreting financial products and services, as well as difficulty completing financial documents, managing bank accounts, resolving problems, and accessing financial education. The Bureau’s report—which is compiled from information gathered in interviews with financial institutions, trade associations, nonprofit advocacy groups, and federal agencies, as well as secondary research—presents five common approaches used in the industry to address issues facing LEP consumers: (i) assessing the language needs of consumers; (ii) offering centralized technical support for translation and interpretation initiatives; (iii) developing systems to ensure accuracy of translations and interpretations; (iv) providing training for staff and contractors to ensure language and cultural competencies; and (v) offering platforms to interact with LEP consumers.

    The report follows the November 16 release of the CFPB’s final version of its Language Access Plan designed to continue efforts to provide non-English speaking persons access to its own programs and services, including offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. (See previous InfoBytes coverage here.)

    Consumer Finance CFPB Consumer Education

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  • CFPB Publishes Notices and Requests for Comment Concerning Collection of Consumer Complaints

    Consumer Finance

    On November 28, the CFPB published two notices of its intention to obtain OMB approval to continue its existing consumer complaint collection activities using its “Consumer Response Intake Form” and “Generic Information Collection Plan for Consumer Complaint and Information Collection System (Testing and Feedback).” According to the CFPB, use of the forms allows for electronic complaint submission on the Bureau’s website and streamlines the complaint process for consumers. Comments on the agency’s notices (CFPB-2017-0035 and CFPB-2017-0036) must be received by December 28, 2017.

    Consumer Finance CFPB Consumer Complaints OMB

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  • CFPB Fines Loan-Servicing Software Company $1.1 Million for Flaws Leading to the Reporting of Inaccurate Consumer Information

    Consumer Finance

    On November 17, the CFPB ordered a loan-servicing software company to pay a $1.1 million penalty for errors that resulted in the company furnishing incorrect consumer information related to over one million borrowers to the credit reporting agencies. The consent order alleges that the company violated the Consumer Financial Protection Act when its third-party software application generated and furnished inaccurate and incomplete information to consumer reporting agencies because of known software defects. The company allegedly did not share the existence of the defects with its auto-lender clients. In addition to the civil money penalty, the company was ordered to: (i) explain its errors to its clients; (ii) fix the faulty software; and (iii) provide the Bureau with a compliance plan outlining how it plans to identify and fix the defects, as well as ensure that the software is capable of reporting accurate information.

    Consumer Finance CFPB Enforcement Credit Reporting Agency Credit Scores CFPA UDAAP

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  • CFPB Initiates Complaint Against Company for Deceptive, Unfair, and Abusive Loan Collection Practices

    Consumer Finance

    On November 15, the CFPB announced it had filed a complaint against a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements. Although the specific claims vary by defendant, the complaint alleges that the defendants engaged in deceptive, unfair, and abusive acts and practices in violation of the Consumer Financial Protection Act (CFPA) by:

    • misrepresenting that consumers were responsible for money owed on loans that were void in whole or in part, or did not exist, because the loans were void under state licensing or usury laws (voided loans);
    • demanding repayment from consumers on voided loans by issuing “demand letters,” electronically debiting funds from consumer bank accounts, and placing phone calls to consumers;
    • failing to disclose to consumers that defendants had no legal right to collect on certain voided loans and that consumers were not legally obligated to repay the loans;
    • causing injury to consumers by servicing and collecting on the voided loans;
    • taking advantage of consumers’ “lack of understanding” regarding the voided loans; and
    • providing assistance in, or administering, the origination and collection of the voided loans.

    The CFPB is seeking monetary relief, civil money penalties, injunctive relief, and a prohibition of the service provider’s ability to commit future violations of the CFPA.

    Consumer Finance CFPB Debt Collection Installment Loans UDAAP CFPA

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