Unfair Acts and Practices / Credit Reporting
On November 19th, the CFPB announced a Consent Order with DriveTime Automotive Group, Inc. and its finance affiliate, DT Acceptance Corp., for alleged unfair acts and practices in violation of the Dodd-Frank Act by failing to prevent certain telephone calls to consumers following the called persons’ requests that DriveTime stop such calls. The CFPB alleges that DriveTime violated the Dodd-Frank Act’s Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) protections by failing to:
- Prevent collection calls to consumers’ workplaces after consumers asked DriveTime to stop such calls;
- Prevent calls to consumers’ third-party references after the references or consumers asked DriveTime to stop calling; and
- Prevent calls to people at wrong numbers after they have asked DriveTime to stop calling.
This is not the first time the CFPB has obtained a Consent Order against a debt collector for harassment of consumers under UDAAP protections. ACE Cash Express, Inc. agreed to a similar Consent Order in July 2014 (previously reported) for allegedly engaging in unfair, deceptive, and abusive practices in connection with its collection of payday loans in violation of the Dodd-Frank Act.
The CFPB also alleged that DriveTime violated the Fair Credit Reporting Act and the Furnisher Rule by furnishing information to consumer reporting agencies that DriveTime had reasonable cause to believe was inaccurate, by failing to correct or delete inaccurate information, and by failing to establish or implement reasonable policies for information accuracy.
The Consent Order requires DriveTime to pay $8 million as a civil monetary penalty and to arrange for affected consumers to obtain free credit reports. The Consent Order marks the CFPB’s first action against a “buy-here, pay-here” car dealer, which both sells automobiles and provides auto loan services.
On November 13th, the CFPB announced that it asked a federal district court judge to approve a Consent Order requiring California mortgage lender, Franklin Loan Corporation (Franklin Loan), “to end its illegal compensation system and refund the consumers it harmed.” The CFPB alleges that from June 2011 to October 2013, Franklin Loan paid approximately $730,000 in bonuses to loan officers based in part on the interest rates on the loans they provided to borrowers; the higher the interest rate of the loans, the greater the bonus. “Paying bonuses for steering borrowers into more expensive loans violates their trust and is against the law,” CFPB Director Cordray commented. Franklin Loan has agreed to end its allegedly illegal compensation system and agreed to pay $730,000 in redress for affected customers.
On November 17th, the CFPB published its financial report for fiscal year 2014. In the report, the CFPB discussed its consumer regulatory and enforcement efforts over the past year. Specifically, the report details the CFPB’s enforcement and rulemaking results involving:
- Almost $4 billion in penalties, redress and relief to consumers;
- A new rule “requiring easier-to-use mortgage disclosure forms” for homebuyers; and
- The issuance of a rule allowing for the CFPB to supervise certain nonbank student loan servicers.
The report also explains the CFPB’s organizational structure and provides financial statements for fiscal years 2013 and 2014.
On November 18th, the CFPB issued a bulletin as guidance to lenders for avoiding discriminatory lending practices against consumers receiving disability income. The bulletin highlights the applicable standards and guidelines that lenders should be aware of to avoid lending practices that violate the Equal Credit Opportunity Act. “Consumers should not be put at a disadvantage just because they receive Social Security disability income. Lenders should continue to make fair and responsibly underwritten mortgages without imposing unnecessary requirements on consumers who receive these benefits,” CFPB Director Cordray stated. In addition to the bulletin, the CFPB published a corresponding blog post entitled, “Social Security Disability Income Shouldn’t Mean You Don’t Qualify for a Mortgage.”
Student Loan Forgiveness
On November 17th, the CFPB published a blog post directed towards military veterans outlining common “concerns” associated with private student loan forgiveness programs. The CFPB cites recurring complaints from veterans and servicemembers to emphasize that consumers often experience damage to their credit report when “their student loan servicer provides incorrect information to the credit bureaus.” Consequently, the CFPB emphasizes two “reminders” for veterans and servicemembers seeking student loan forgiveness: check your credit report regularly and inquire about any uncertainties with the credit reporting company.