CFPB Highlights Findings from Supervisory Exams

The CFPB highlighted findings from supervisory examinations completed between January 2022 and June 2022.

In its periodic publication Supervisory Highlights, the CFPB reported on examinations that covered, among other things, (i) auto servicing, (ii) consumer reporting, (iii) credit card account management, (iv) debt collection, (v) deposits, (vi) mortgage origination and servicing and (vii) payday lending.

The CFPB observed that "examiners continue to identify the same violations of law across multiple institution," even though such violations were highlighted in past issues. Relatedly, the CFPB noted that it is "increasing its focus on repeat offenders, particularly those who violate agency or court orders," and has created a Repeat Offender Unit.

Among other things, the CFPB highlighted:

• Unfair and deceptive practices in the auto servicing industry. The CFPB found that auto servicers failed to ensure that customers who paid off loans early were refunded the cost of unearned fees relating to add-on products and that servicers only ensured refunds issued in instances of repossession. The CFPB also found that servicers, among other things, (i) made misleading claims on loan modification requests, (ii) double-billed customers for collateral protection insurance and (iii) made deceptive representations that customers drivers' licenses would be suspended for failure to make timely payments on loans.

• Violations of the Fair Credit Reporting Act. The CFPB found that nationwide credit reporting companies ("CRCs") failed to report the outcome of customer disputes involving incomplete or inaccurate information to the CFPB, as required. Additionally, information "furnishers," the companies that provide CRCs with reporting data, were found to have provided information to CRCs that was inaccurate.

• Violations of Regulation Z ("Truth in Lending Act"). The CFPB found violations of Regulation Z in relation to credit card account management operations. The CFPB found that certain creditors (i) failed to deliver written notice of billing errors to customers within 30 days, (ii) failed to resolve a dispute within two business cycles or 90 days after receiving notice regarding the failure to credit a payment that the consumer made, (iii) failed to reimburse a consumer for a late fee after the creditor demonstrated it was owed, and (iv) failed to conduct a reasonable investigation after receiving notice of a billing error related to missing payments and unauthorized transactions; and

• Violations of Regulation X ("Real Estate Settlement Procedures Act"). The CFPB found violations of Regulation X in relation to mortgage servicing. The CFPB found certain mortgage servicers charged fees to unsuspecting customers for (i) late payments while under Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") forbearance, and (ii) payments made over the phone. The CFPB found that certain mortgage servicers also failed to timely process CARES Act forbearance requests and did not properly evaluate customer accounts to consider all possible loss mitigation options at the outset of the pandemic.