This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing consumer finance regulatory landscape.

Enforcement actions

Federal

CFPB announces $2.7 million settlement with reverse mortgage lender. The CFPB announced a stipulated final judgment with the nation’s largest provider of reverse mortgages for alleged deceptive marketing practices and violations of a 2016 consent order. The CFPB alleged that the company engaged in deceptive marketing practices by inflating consumers’ estimated home values to entice them to seek reverse mortgages and falsely reassured consumers that the company made “every attempt to ensure the home value information it provided is reliable” when it did not. Under the settlement, the company would be required to pay a $1.1 million civil penalty and $173,400 in consumer redress as well as adopt an enhanced compliance plan.

CFPB files suit against software company for assisting in illegal credit-repair operations. The CFPB filed a complaint in the US District Court for the Central District of California against a software company for allegedly violating the Telemarketing Sales Rule (TSR) by providing substantial assistance to credit-repair businesses accused of unlawful telemarketing and charging unlawful advance fees to consumers. The CFPB alleges that the defendant provided a software platform, training services and marketing services to help others start credit-repair businesses and encouraged them to charge illegal advance fees. The CFPB seeks disgorgement of fees received as well as civil penalties and an order enjoining the defendant’s conduct.

FTC announces $3 million settlement with Atlanta-based debt collectors. The FTC announced a settlement with a debt collection company and its principals for alleged violations of the Fair Credit Reporting Act (FCRA). According to the FTC’s complaint, the company’s collectors (i) regularly posed as law enforcement officers, attorneys, mediators or process servers and threatened consumers with arrest and imprisonment during the course of collecting debts; and (ii) attempted to collect “phantom” debt – debt that either was never owed or is no longer owed by the consumer. As part of the FTC’s settlement, the company and its owners will be permanently banned from the debt collection industry and will pay more than $266,000 to the FTC, as well as over $3 million in damages.

OCC issues consent order against bank for technological security deficiencies. The OCC issued a consent order against a national bank based on its alleged unsafe practices surrounding its technology and operational risk management, as well as the bank’s noncompliance with the Interagency Guidelines Establishing Information Security Standards contained in Appendix B to 12 C.F.R. Part 30. Under the consent order, the bank will be required to adopt (i) enhanced technology and operations risk reporting directly to the board of directors, (ii) a technology risk assessment process for ongoing monitoring, (iii) an IT and operational risk governance plan, (iv) a data management and reporting plan and (v) enhanced operational policies, internal controls, information security policies and staffing support for the same.

State

California DFPI announces lawsuit against debt collector for unfair and deceptive practices. The California DFPI announced its first enforcement action under California’s Consumer Financial Protection Law (CCFPL) against a debt collection company. The DFPI alleges that the company violated the CCFPL by unlawfully threatening to sue consumers and garnish their wages, concealing its identity and making false statements in communications with consumers, and issuing negative information to credit bureaus without first notifying customers. The DFPI assessed a $375,000 fine against the company for violations of the CCFPL, the Rosenthal Fair Debt Collection Act, the Fair Debt Collection Practices Act and the Consumer Credit Reporting Agencies Act.

Regulatory Developments

State

California DFPI announces mandatory reporting requirements for home mortgage servicers. The California DFPI announced that it will require licensees handling residential mortgages – either directly or through sub-servicers – to provide information about the actions they are taking to help homeowners avoid foreclosure. Such actions include processes for screening borrowers’ potential eligibility for state and federal foreclosure aid, procedures and plans for compliance with loss mitigation requirements, and assessments of the magnitude of foreclosure risk among the loans the licensee services.

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