The Consumer Financial Protection Bureau recently released its 34th issue of Supervisory Highlights, a periodic publication that summarizes the CFPB’s findings from examinations of entities that it supervises. This issue focuses on debt collection and related areas of the consumer financial services industry.
According to the Highlights, some auto financing servicers failed to notify consumers approaching their final payment that they must make that payment manually, even where they have chosen to make other payments automatically. As the CFPB explains, the payment systems that these servicers used did not deduct a final payment automatically where the amount of the final payment differed from the amounts of other scheduled payments. Servicers allegedly did not notify customers adequately of the need to make the final payment manually and then charged those customers late fees for not making the payment on time. The CFPB found this alleged practice to be unfair because it caused harm to consumers that consumers could not reasonably avoid, and no benefit to consumers or to competition outweighed this harm.
The largest section of this issue of the Highlights focuses on debt collection. The CFPB claims to have found evidence of violations of Regulation F by entities that it had examined recently. For example, the CFPB claims that some debt collectors failed to send a required debt validation notice within five days after initial contact with a consumer. The CFPB reminds debt collectors that if a debt collector sends a debt validation notice in writing or electronically and is informed that the notice was not delivered, it has not fulfilled its obligation to give the notice.
The Highlights edition also cites allegedly false, deceptive, and misleading representations by debt collectors. The CFPB reports that some debt collectors did not use their true company names in communications with consumers. The CFPB also claims that some debt collectors failed to disclose that they were debt collectors, which might lead consumers not to realize that the Fair Debt Collection Practices Act gives them rights, including the right to dispute debts. The requirement to disclose that a communication is from a debt collector applies both to the initial communication with a consumer and to later communications, although the content of the required disclosure differs between the initial communication and later communications. The CFPB cites failures to provide both the initial disclosure and the later disclosures that a communication is from a debt collector.
The above isn’t a complete list of topics discussed in the latest Highlights. The topics I’ve discussed have a common thread, though—they involve failures to keep a consumer informed as the law requires. Consumers expect that the companies servicing their debt, both before and after default, will tell them what they need to know to comply with the terms of their credit obligations and to exercise any rights that they may have. Make sure that everyone who communicates directly with consumers knows what disclosures are necessary and when they’re necessary. If anything about a consumer’s transaction changes, such as the fact that the last payment will not be made automatically, tell the consumer soon enough so that he or she can act appropriately in response.
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