"For the first time at the federal level, nonbank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers," said CFPB Director
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), the
Today's report generally covers supervisory activities between
Payday loans are frequently described as a way for consumers to bridge a cash flow shortage between paychecks or the receipt of other income. Payday loans often have small-dollar amounts, require borrowers to repay quickly, and ask that a borrower give lenders access to repayment through a claim on the borrower's deposit account. The problems that
* Lenders deceiving consumers to collect debt: When payday lenders called borrowers to collect debt, they sometimes threatened to take legal actions they did not actually intend to pursue. Examiners cited these threats as unlawful deceptive practices. Other lenders threatened to impose additional fees or to debit borrowers' accounts at any time, when this was not allowed by their contract. Examiners also found lenders lied about non-existent promotions to induce borrowers to call back about their debt.
* Lenders illegally harassing borrowers and visiting consumers at work:
* Lenders hiring third-party collectors that illegally deceive and harass consumers: Many payday lenders hire third parties to collect their debts. The
Debt collection practices have long been a source of frustration for many consumers. The practices have generated a heavy volume of consumer complaints at all levels of government, including at the
* Debt collectors intentionally and illegally misleading consumers about litigation: Examiners found that debt collectors violated the Fair Debt Collection Practices Act (FDCPA) by filing lawsuits, which implied that they intended to prove their claims, when they had no such plans. The collectors typically dismissed the suits if consumers answered them because they were then unable to produce the documents to support their claims.
* Debt collectors making excessive, illegal calls to consumers: Examiners found that one debt collector had made approximately 17,000 calls to consumers outside of the appropriate times established by the FDCPA. That company further violated the law by repeatedly contacting more than 1,000 consumers as often as 20 times within two days.
* Debt collectors failing to investigate consumer credit report disputes: Debt collectors often furnish information to consumer reporting agencies, which use it when compiling consumers' credit reports. Debt collectors generally must investigate when a consumer disputes information they have sent to a consumer reporting agency. Examiners found evidence that a debt collector was deleting disputed accounts rather than investigating such disputes, and examiners directed this collector to investigate disputes it receives regarding information it furnished.
Consumer Reporting Agencies
The Bureau also discovered problems at consumer reporting agencies. These agencies include companies that are popularly called credit bureaus or credit reporting companies.
Today's report aims to share information that all industry participants can use to ensure their operations remain in compliance with federal consumer financial law. In all cases where
Today's Supervisory Highlights report is available at: http://www.consumerfinance.gov/reports/supervisory-highlights-spring-2014/
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