CFPB Highlights Supervisory Findings on Servicing and Collection of Consumer Debt

In a report detailing results from supervisory examinations completed between April 1, 2023 through December 31, 2023, the CFPB found financial institutions engaging in unfair, deceptive or abusive acts in their debt collection and debt servicing practices.

The CFPB highlighted the following observations:

• Auto Loan Servicing. The CFPB found that servicers failed to debit consumers' final payment via their autopay system without adequately notifying borrowers enrolled in autopay that they needed to make the final payment manually. The CFPB said that servicers then charged consumers late fees for failing to make the final payment on time. 

• Student Loan Servicing. The CFPB said that servicers had excessive hold times, averaging "40 minutes over a six-month period," when consumers contacted them. The CFPB stated that servicers significantly understaffed their call centers and disabled consumers' access to online management portals where consumers made payments. In addition, the CFPB found that servicers provided inaccurate information on forms consumers should submit to qualify for loan benefits. Further, the CFPB said that servicers failed to provide required written notice to consumers of preauthorized funds transfers that exceeded the previous transfer amount. 

• Credit Card Account Management–Medical Payment Products. The CFPB found that healthcare providers misrepresented the specifics of "deferred interest" promotions. The CFPB said consumers were confused on whether their monthly payments would be promotional or nonpromotional balances. The CFPB further found that consumers while receiving treatment felt pressured by healthcare providers to open a credit card. 

• Debt Collection. The CFPB said debt collectors communicated with consumers at times and places known by the collectors to be inconvenient or unusual. For example, the CFPB said that debt collectors sent communications before 8 a.m. or after 9 p.m., or continued phone conversations when customers were at work or driving. The CFPB further stated that debt collector agents "took an aggressive tone and were verbally abusive" towards consumers. 

• Deposit and Prepaid Accounts. The CFPB found that some institutions failed to affirmatively notify consumers after account freezes. The CFPB also said that institutions did not send periodic statements to consumers with dormant allotment accounts of servicemembers and other federal employees who may have had accounts opened without their knowledge. The CFPB further found that some institutions, in order to comply with CFPA Section 1034(c) ("Consumer Information Requests to Large Banks and Credit Unions") ceased charging fees for customer requests for information, including fees related to bank account research and balance inquiries at third party ATMs.