CFPB Bites of the Month – September Top 10: Happy Fall Y’all | Hudson Cook, LLP

In this month’s top 10 article, we share some of our best “bites” from the previous month, covered during the September 21, 2022 webinar.

So what happened last month?

Extra-Bite: CFPB comments on loan cancellation related to for-profit college

On August 16, director Chopra made Remarks about consumers allegedly being scammed by a now-closed college. Principal Chopra commented that they are very pleased that the Department of Education and its Office of Federal Student Aid have taken the legal action to allegedly cancel their loans. He also said the CFPB plans to continue examining private loans directly funded by schools – to ensure schools are not “heavily arming” their students with illegal practices.

Bite #10: CFPB study looks at “buy now, pay later” transactions

On September 15, the CFPB published a report in relation to the “buy here, pay here” industry. The Buy Now, Pay Later: Market Trends and Consumer Impact report warned that consumers “may receive inconsistent disclosures and protections.” Director Chopra commented that “Buy Now, Pay Later” is a fast-growing type of loan that serves as a close replacement for credit cards, and that the CFBP “will work to ensure borrowers have similar protections, regardless of whether they… use a credit card or a “buy now, pay later” loan.” The CFPB also said it will use interpretative guidance, or rules, to direct BNPL providers to adhere to “many of the basic safeguards” that Congress establishes for credit cards To reduce the risk of “overextension,” the CFPB said it would continue to engage in “reasonable and accurate credit reporting processes.”

Bite #9: CFPB and Centers for Medicare and Medicaid Services cater to nursing home practices

On September 8th, the CFPB and the Centers for Medicare and Medicaid Services announced Issue in the spotlight, circularand joint letter Dealing with the requirements for admission to a nursing home and debt collection. The report found that under the Nursing Home Reform Act, nursing homes may not require that a third-party nurse personally guarantee payment as a condition of the resident’s admission. It was also noted that any attempts to collect caregiver debt may violate the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

Bite #8: CFPB publishes a report on families living in rural areas

On September 1, the CFPB issued its first report, in a planned series of reports on families living in rural areas. The report focused on 13 Appalachian states that the CFPB has described as “disproportionately rural.” The report also points out that “Appalachia” earns less than consumers in other rural areas and has higher subprime loan rates. The CFPB stated that the report was intended to “start a conversation with stakeholders in the region” and that it would “monitor credit conditions” and use enforcement and other tools to “ensure” that the rural Appalachia market is fair, transparent and competitive.

Bite #7: The CFPB annual report shows an end to the funding boom

On September 19, the CFPB released its yearbook report on activity and trends in residential mortgage lending. The report shows a shift from refinancing loans in 2020 to home purchase loans in 2021, with a larger proportion of home purchase loans going to Asian, Black and Hispanic White borrowers compared to the proportion of home purchase loans going to non-Hispanic White borrowers. This year’s analysis also included additional key findings from a decline in mortgage lenders reporting the HMDA date in 2021, noting that the increase in mortgage origination was driven by home loans as refinancing loans declined.

Bite #6: CFPB says providers have an obligation to investigate consumer disputes

On September 14, the CFPB and FTC revisited providers’ duty to investigate credit disputes. The two agencies jointly submitted an amicus meager before the US Court of Appeals for the Third Circuit, finding that if a consumer files a dispute with a credit reporting agency and the dispute is referred to the provider, the provider has a duty to conduct an investigation and report the results of its investigation to the lender reporting company to be forwarded. The brief notes that a furnisher cannot circumvent this obligation by claiming that a dispute is “frivolous.” Providers are required to inform consumers of any additional information they need, rather than simply ignoring potentially frivolous disputes.

Bite #5: CFPB is unlikely to enact consumer arbitration rules any time soon

On September 19, Director Chopra appeared at a public justice event and spoke about arbitration. According to media reports, Director Chopra noted that the CFPB is considering arbitration options, but that the Congressional Review Act prevents the CFPB from using its prior rulemaking to resolve the CFPB’s concerns. In order to enact new rules, the CFPB would need to conduct a new arbitration study, and Chopra suggested that the introduction of new consumer arbitration rules seems unlikely at this point.

Bite #4: Republican senators are writing to Director Chopra

On a 12.09 Letter to Director Chopra, 12 Republican senators alleged that the CFPB abused its authority by using “name-and-shame tactics” to pressure companies to eliminate overdraft fees. Among various concerns, the senators said the CFPB changed its rules to allow it to release previously confidential information about financial institutions.

Bite #3: A consumer group and banking association are calling for more fintech regulation

On September 15, the Consumer Bankers Association and the Center for Responsible Lending come together requested the CFPB called for a “major participant rule” so that the CFPB could schedule “audits” of organizations that offer installment loans and lines of credit. CRL and CBA called for regulation to cover fintech companies that originate and manage personal loans. In their joint letter, the CRL and CBA commented that fintechs and non-bank originators of personal loans are not subject to regular CFPB oversight, which has created “an unlevel playing field and great risk to consumers.”

Bite #2: CFPB sends $859,000 in payments to consumers over alleged harassment by a debt collector

On September 14, the CFPB announced that more than 8,000 people will receive checks totaling more than $859,000 after allegedly being falsely threatened with legal action by a federal debt collector. Checks are mailed by Rust Consulting, a class action and case settlement administrator. This distribution follows an April 2021 consent order against a debt collector and its former owner for alleged violations of both the Consumer Financial Protection Act and the Fair Collection Practices Act. The consent order permanently banned both the collector and its owner from collection business and ordered restitution and penalties.

Bite #1: CFPB makes payments for alleged victims of an auto loan payment company

On September 2nd also the CFPB announced Details of payments to consumers previously involved in certain auto loan payment transactions. In August 2022, the CFPB began mailing checks to eligible consumers who had previously enrolled in a program to expedite their loan payments through an auto loan company. This distribution follows a November 2020 consent order against an auto loan payment company and its owner. The CFPB had alleged that the company misrepresented the amount consumers would save when using its payment platform by not including the application fee in the calculations presented to consumers. According to the CFPB, the cost of the program typically exceeded any savings due to the enrollment fee. The CFPB also found that the company’s advertising claimed that it had helped hundreds of thousands of customers save millions of dollars in interest by participating in the program, although they had no basis for that claim. The CFPB ordered the company and its owner to pay $9,300,000 in compensation to more than 100,000 consumers. Checks for these payments are also mailed by Rust Consulting, the class action and case settlement administrator.

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