Removing Barriers Blog

CFPB Publishes Winter 2016 Supervisory Highlights
Posted March 09, 2016 by Chandler Schuette

The Consumer Financial Protection Bureau (CFPB) released its latest supervision report today. The report highlights enforcement actions in the student loan market, including illegal automatic defaults by student loan servicers and illegal garnishment threats by debt collectors performing services for the Department of Education. Examiners also reported instances of international money transfer companies violating the CFPB’s new remittance rule, banks providing inaccurate information to credit reporting companies about customer checking accounts, and debt collectors illegally contacting consumers.

While there are several takeaways from the report which CUNA’s Compliance Department will address, we wanted to highlighted the below sections which intersect with CFPB policymaking.

  • Illegal inaccuracies with deposit account information provided to credit reporting companies: The CFPB examiners found that one or more banks or credit unions failed to update checking account information they had supplied to the checking account reporting companies. For example, when consumers paid charged-off accounts in full, one or more banks or credit unions would update their records but would not update the change in status and send that information to the credit reporting companies. Not updating an account to “paid in full” status could negatively affect a consumer’s attempt to open a new checking account. Federal law says that depository institutions must have systems in place regarding accuracy when they pass on information to checking account reporting or other credit reporting companies.

  • Failure to honor written requests by consumers to cease debt collection communications: The CFPB found at least one debt collector that failed to comply with the Fair Debt Collection Practices Act requirement to stop contact. Federal law says that after a consumer notifies a debt collector in writing that he or she refuses to pay a debt or wants a debt collector to stop contacting them, the collector must, with few exceptions, stop. Bureau examiners found at least one debt collector failed to honor this requirement. The failures resulted from system errors, such as mistakes during manual data entry.

In February the CFPB held a field hearing about checking accounts and released a new bulletin on credit reporting. The bulletin requires a furnisher to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information relating to consumers they furnish to Credit Reporting Agencies. Sandy Gogan, a CUNA member, testified at this hearing and noted, “One of the things we have done, and credit unions in general are good at, is educating our members on ways to avoid fees and ways to not have fees." Further, she added, “The accounts we offer for the underbanked are just part of the credit union philosophy of 'people helping people' ... the mission we have is to make sure our members are successful.”

CUNA is also expecting the CFPB to propose new rules for the Fair Debt Collection Practices Act in 2016 or 2017. The CFPB previously published an ANPR for debt collection in the fall of 2013, and CUNA filed comments urging the CFPB to treat credit unions contacting their own members differently than abusive debt collectors. We expect a SBREFA panel for the FDCPA rulemaking could be held this year.