CFPB Releases New Supervisory Highlights Related to Servicing and Collection of Consumer Debt

Posted by Gracie Nelson on July 3, 2024

The CFPB published an edition of the Supervisory Highlights on July 2, sharing findings from recent examinations on auto and student loan servicing, debt collection services, medical payment products, and deposit and prepaid account management. Below is a brief overview of the Supervisory Highlights: 

Auto Loan Servicing:  

• Auto Loans and Final Loan Payments: The CFPB examined how financial institutions notify borrowers about final manual payments after autopay enrollments, so borrowers are not unknowingly charged late fees.  They found that some servicers are committing UDAAP violations for failing to auto debit final payment on car payments without notifying borrowers that the final payment must be submitted manually. 

Preauthorized electronic funds transfers:  

• The CFPB found financial institutions in violation of the Electronic Funds Transfer Act (EFTA) citing Reg E violations. Specifically noting that financial institutions failed to provide consumers with written notice of the amount and date of the transfer at least 10 days prior if the amount will vary on the same preauthorization. 

Debt Collection:

• The CFPB noted numerous violations of the Fair Debt Collections Practices Act citing failure to provide valid debt notice, false deceptive or misleading representations, communication at inconvenient and unusual times or places, harassing or abusive conduct, failure to cease communication after a consumer request, and incorrect documentation related to the statute of limitations in credit card collections. 

Deposit and Prepaid Account Management: 

• The CFPB looked at communication with borrowers regarding account freezes and customer service in fixing problems. The CFPB is also gathering information regarding financial product types after surveying various financial institutions on avenues of obtaining account information including check images and statements.  The CFPB found financial institutions specifically noted that financial institutions had consumer violations related to account freezes, failure to provide periodic statements for allotment savings accounts, and had barriers related to consumer requests for information that violated consumer rights.  

Other areas of focus: 

• Student Loan Servicers and Assistance: This section focuses on the assistance of financial institutions in providing information through call centers, response systems, notifications and fund transfers. 

• The CFPB assessed the relationship between the Fair Debt Collection Act and debt collectors. Specifically, the CFPB focused on student loan debt collectors disclosures and notices of initial communication with borrowers within five days. Additionally, the CFPB assessed the timing and manner of debt collector communications with borrowers. 

• The CFPB examined how medical credit cards are marketed to consumers through healthcare providers, focusing on the transparency and pressure tactics used during promotion. 

Looking ahead, we can utilize the CFPB’s Supervisory Highlights to gather examine insights and areas of focus. As the NCUA puts additional resources into consumer compliance we expect that some of the CFPB exam focus areas will also be areas of focus for the NCUA. GoWest will diligently track movement within the CFPB regulatory landscape and update our members as new developments arise.  

Posted in Advocacy on the Move, Regulatory Advocacy.