The latest Consumer Financial Protection Bureau Supervisory Highlights (Issue 12, Summer 2016) reveals that bureau supervisory actions in the first four months of the year uncovered illegal activities in auto finance and payments that led to approximately $24.5 million in restitution to more than 257,000 consumers. The report also spotlights issues CFPB examiners found through the examination of businesses in auto loan origination, debt collection, mortgage origination, and small-dollar lending. The report covers activities completed generally between January 2016 and April 2016.
"This report highlights our ongoing work to address violations of the law and slipshod practices that endanger consumers," said CFPB Director Richard Cordray. "The Bureau’s supervisors continue to perform more and better oversight of these financial markets, and their report gives the industry an opportunity to reflect on their practices before consumers are made to suffer harm."
Examination findings. The CFPB notes that the bureau often finds problems during supervisory examinations that are resolved without enforcement activity. Recent non-public supervisory actions resulted in restitution of about $24.5 million to more than 257,000 consumers for auto finance and payments issues. Issues with debt sales spurred an enforcement action that returned nearly $5 million to consumers and imposed $3 million in civil money penalties.
As reported, CFPB examiners uncovered issues across a number of financial markets, including:
- deceptive acts and practices by auto lenders, including deception about add-on products and the terms of a loan deferral;
- miscalculation of loan financing amounts in which a consumer pays more in interest in exchange for the lender giving money upfront to offset closing costs;
- failure to accurately disclose the interest on interest-only loans by incorrectly including in the principal balance a portion of the monthly payment amount that was to be applied to fees financed into the principal balance;
- selling of ineligible accounts by and to debt sellers;
- misleading consumers about debt repayment options;
- failing to provide adverse action notices in violation of the Fair Credit Reporting Act; and
- illegally requiring consumers to use affiliated providers of tax services and flood determination in violation of federal law.
Supervision program. The report contains information on developments within the CFPB’s supervision program including the coordination between the bureau and appropriate federal and state bank and nonbank regulators. In addition, a list of guidance published by the CFPB during the covered time period is included in the Supervisory Highlights.
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