Category Archives: Government

CFPB Releases Fall 2021 Supervisory Highlights


The CFPB recently issued its Fall 2021 Supervisory Highlights, discussing findings from its examinations in connection with credit card account management, debt collection, fair lending, mortgage servicing, deposits, prepaid accounts, and remittance transfers.

This is the 25th edition of the CFPB’s Supervisory Highlights and it covers the examinations that were completed between January 2021 and June 2021.  Some of the key findings in the Fall 2021 Supervisory Highlights include:

  • Fair Lending. The CFPB discovered that some mortgage lenders violated ECOA by discriminating against African American and female borrowers in the granting of pricing exceptions based on competitive offers.  Examiners noted that, among other things, lenders did not have a formal policy on the use of this exception and relied on managers to promulgate a “verbal policy that a consumer must initiate or request a competitor price match exception.”  The CFPB also stated that lenders had unexplained statistically significant disparities for the incidence of pricing exceptions for African American and female applicants compared to similarly situated non-Hispanic white and male applicants.  Moreover, examiners found that some lenders improperly inquired about small business applicants’ religion and considered an applicant’s religion in their credit decision, in violation of ECOA and Regulation B.
  • Mortgage Servicing. The Bureau stated that certain mortgage servicers engaged in unfair acts or practices by (i) charging delinquency-related fees to borrowers in CARES Act forbearances, (ii) assessing fees that were higher than the actual cost for the services performed, and (iii) failing to terminate electronic fund transfers (EFTs) after receiving a notice that the consumer’s account had been closed and a fee for insufficient funds had been charged to the consumer.  Examiners also discovered that some servicers incorrectly disclosed transaction and payment information in borrowers’ online mortgage loan accounts.  Furthermore, the CFPB stated that it found violations of “Regulation X requirements to evaluate borrowers’ complete loss mitigation applications within 30 days of receipt, Regulation Z requirements relating to overpayments to borrowers’ escrow accounts, and Homeowners Protection Act (HPA) requirements to automatically terminate private mortgage insurance[.]”
  • Debt Collection. The CFPB found that various debt collectors, in part, misrepresented to consumers that restarting and completing a payment plan would improve the consumer’s creditworthiness upon final payment under the plan and the deletion of the tradeline.  The Bureau noted that there are several factors that influence an individual’s creditworthiness, including the tradelines previously furnished by prior owners of the same debt, and that completing a repayment plan does not guarantee an improved credit score.
  • Remittance Transfers. Examiners found that some remittance transfer providers violated the Remittance Rule. Specifically, the CFPB stated that providers received notices of errors alleging that remitted funds had not been made available to the designated recipient by the disclosed date of availability. However, these providers then failed to investigate whether a deduction imposed by a foreign recipient bank constituted a fee that the providers were required to refund to the sender.
  • Deposits. The Bureau discovered that, in some cases, due to incorrect or outdated information in the digital payment network directory, some consumers’ EFTs were sent to unintended recipients.  This occurred even though the consumer provided the correct identifying token information for the recipient. Moreover, in violation of Regulation E, certain institutions failed to conduct reasonable error investigations when they received error notices from consumers indicating that the consumers had sent funds via a person-to-person payment network, but the intended recipients had not received such funds.
  • Credit Card Account Management. Examiners stated that certain credit card issuers engaged in deceptive acts or practices by advertising, but not granting, bonus offers to existing customers for opening a new credit card account and meeting certain spending requirements.  The Bureau also discovered that credit card issuers misled consumers who responded to advertisements offering incentives for opening a new account and spending a minimum amount. Furthermore, examiners found that creditors violated Regulation Z’s billing error resolution requirements by failing to: (i) resolve a dispute within two complete billing cycles after receiving a billing error notice regarding the failure to credit a payment made by the consumer; (ii) reimburse a consumer for a late fee after it determined a missed payment had not been properly credited to the consumer’s account; and (iii) conduct reasonable investigations after receiving billing error notices related to a missing payment and unauthorized transactions.
  • Prepaid Accounts. The CFPB noted that some financial institutions included language in their Terms of Use agreements that forfeited the consumer’s rights provided by EFTA and Regulation E.  The Bureau also stated that certain financial institutions failed to comply with Regulation E’s requirements related to investigating alleged EFT errors.
  • Payday Lending. Examiners found that certain lenders engaged in deceptive acts or practices by debiting or attempting to debit from consumer’s accounts the remaining balance of their loans on the original due date after the consumers  applied for a loan extension, and received a confirmation email stating that only an extension fee would be charged on the due date.  The CFPB also stated some lenders engaged in unfair acts or practices by debiting or attempting one or more additional, identical, unauthorized debits “from consumers’ bank accounts after consumers called to authorize a loan payment by debit card and lenders’ systems erroneously indicated the transactions did not process.”

Similar to past Supervisory Highlights, the Fall 2021 report includes information about recent public enforcement actions that were a result, at least in part, of CFPB’s supervisory work.

Scott Requests CFPB Reconsider ‘Misguided’ Rule

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A newly proposed data collection rule issued by the Consumer Financial Protection Bureau (CFPB) would place an undue burden on small business owners, farmers and lenders in South Carolina and across the United States, according to U.S. Sen. Tim Scott (R-SC), who requested that the bureau rethink its proposal.

The CFPB’s proposed rule — entitled Small Business Lending Data Collection Under the Equal Credit Opportunity Act (Regulation B) — would amend Regulation B to implement an amendment to the Equal Credit Opportunity Act made by section 1071 of the Dodd-Frank Act, according to a Jan. 5 letter Sen. Scott and U.S. Rep. William Timmons (R-SC) sent to CFPB Director Rohit Chopra.

“While we are extremely concerned with the burden that this proposed rule would have on small businesses and small community banks,” they wrote, “it has been brought to our attention that the proposed rule would have an outsized effect on Farm Credit institutions and the farmers that they serve.”

Sen. Scott and his colleague think that the CFPB has failed to take the appropriate steps to engage with these institutions on the proposed rule, which could “hurt not only these lending institutions, but American farmers themselves.”

“In short, we feel that these actions being proposed by the CFPB are misguided and ill-informed, especially considering the challenges that farmers are currently facing due to rising inflation, prolonged supply chain disruptions, and labor shortages,” the lawmakers wrote. “We strongly urge you to change course.”

While the proposed rule states that it would impact 40 percent of all depository institutions, it would simultaneously impact 100 percent of farm credit lenders due to the proposal’s definitions of “small business” and “business credit” that do not take into account the inherent differences between American farms and other American businesses, wrote the lawmakers.

“If the CFPB had actively worked to hear the concerns of the lenders they regulate, this type of oversight would not have happened,” they wrote, noting that the subsequent burden ultimately would trickle down to the lenders’ clients across all industries.”

“At a time when the federal government seems to be doing everything it can to make farmers’ jobs more difficult — we believe this unnecessary regulatory expansion is ill-timed and hurtful,” wrote Sen. Scott and his colleague.

They urged Chopra not to take any action without a thorough data collection process and careful consideration of input from all lenders and their clients.

Consumer Spending Jumps Past Pre-Pandemic Levels Amid Online Boom

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Consumer spending shot higher against pre-pandemic levels in 2021 as the boom in online shopping continued, according to figures.

Barclaycard said consumer credit card spending rose by 5.9% in 2021 compared with 2019, despite the closure of shops, hospitality and leisure firms for significant parts of the year.

The credit card giant said spending on hospitality and leisure was noticeably impacted by the periods of restrictions.

However, it added that social distancing measures and other virus curbs spurred demand for indoor experiences and outdoor pursuits, with shoppers spending more on digital entertainment and at outdoor and sports retailers.

Local food retailers, takeaways and digital entertainment continued to do well, thanks to Brits’ demand for convenient, local and at-home shopping experiences
Jose Carvalho

The boom for home improvement as people spruced up their homes after periods of lockdown also continued from 2020 into the past year.

Jose Carvalho, head of consumer products at Barclaycard, said: “2021 was another challenging year, as the pandemic continued to hamper the UK economy.

“However, categories such as local food retailers, takeaways and digital entertainment continued to do well, thanks to Brits’ demand for convenient, local and at-home shopping experiences.

“In addition, with more time spent working from home, Brits continued to invest in their households, resulting in strong growth for both DIY and pet stores.”

The data from Barclaycard showed that homeowners splashed out more on their properties, with spending on home improvements and DIY up 26.2% and furniture 19.8% higher.

Consumers also brought more pets into their homes, resulting in a 29.1% jump in spending on vets and pet retailers.

The boom in staycations saw UK hotels and resorts bounce back in the summer, with 3.7% growth in June and 15.9% in August.

Clare Bailey, founder of the Retail Champion, said: “It is encouraging to see that many categories have enjoyed growth in what has been another turbulent year.

“Local shops continue to be supported by community-spirited Brits, while sports, clothing and health and beauty retailers all saw uplifts as the nation enjoyed post-lockdown life.

“While the economic impact of Omicron remains to be seen, we can admire the retail, hospitality and leisure sectors for once again adapting to ever-evolving circumstances and overcoming so many challenges this year.”

Marylanders submit most robocall complaints to FTC

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ANNAPOLIS — During the 2021 fiscal year, Maryland residents submitted the most complaints to the Federal Trade Commission per 100,000 people regarding telemarketing sales calls and robocalls, according to recent data released by the FTC.

Delaware residents submitted the second highest number of complaints to the FTC per capita, with 1,982 complaints per 100,000 people, just under Maryland’s 2,028 complaints per 100,000.

The FTC operates the Do Not Call Registry, which allows consumers to opt-out of most legal telemarketing calls, and allows the commission to take “aggressive legal action” against companies that violate the DNC Registry through excess unwarranted robocalls or with telemarketing fraud, among others.

The registry does not apply to political calls, surveys, calls from nonprofits and charities and calls from companies with which consumers have done business in the last 18 months.
Across the nation, just under 5 million complaints were submitted to the FTC this past fiscal year, rising from 3.9 million last fiscal year.

Within Maryland, St. Mary’s County submitted the most complaints to the FTC per 100,000 people, with 3,692 complaints. Somerset County, on the other hand, submitted only 56 complaints per 100,000 people, the least number of complaints across the state.

Of all the complaints received from Maryland residents, 69% of the over 122,000 calls described robocalls. Nine percent of complaints did not indicate the call type.

Maryland residents reported the most unwanted calls from imposter government agencies or businesses, which aligns with the national trend. In such calls, imposters falsely pose as government representatives, such as the Social Security Administration or the IRS, according to a FTC press release.

Calls about warranties and protection plans were the second-most commonly reported.

Currently, there are 244 million phone numbers registered with the FTC’s Do Not Call Registry, with three million registered this past fiscal year. Phone users can verify registration or register a phone number here.

New Hampshire has the highest number of registrations per 100,000 people, at 94,000. Maryland comes in at eighteenth in the country, with 80,700 registrations per 100,000 people. Alaska has the lowest number of registrations per capita.

CFPB Director Rohit Chopra Named One Of ’10 Policymakers To Watch In 2022′

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American Banker, a Manhattan, New York-based trade publication covering the financial services industry, Dec. 29 named its “10 Policymakers to Watch in 2022,” among which was Indian American Rohit Chopra.

Chopra, director of the Consumer Financial Protection Bureau, is one of the appointees by the Biden administration who have set out to unwind certain Trump-era policies and signaled a tougher approach to supervision and enforcement, said the publication in the report.

Regulators appointed by the administration and Democratic lawmakers pushed a more progressive agenda around climate change risks, affordable housing, diversity in the financial system, and pumping the brakes on technological innovations such as cryptocurrency, it added.

Chopra was one of the key figures in both the executive and legislative branches who will try to advance Biden’s financial policy priorities in 2022, the publication said.
Chopra is proving to be one of the most influential financial regulators in the Biden administration, the publication said, noting that he sent shockwaves through the capital in December when he and another Democratic member of the Federal Deposit Insurance Corp. board announced a request for public input on bank merger policy.

Chopra previously was a member of the Federal Trade Commission and had served in the Obama administration as the CFPB’s student loan ombudsman. At the CFPB, he is moving move quickly to shape policy on competition in financial services, and has said he plans to crack down on repeat corporate offenders and executives who engage in wrongdoing, the report said.

Though he has been director of the CFPB for just over two months, Chopra has already ordered six Big Tech firms to turn over information on their payment systems, warned of a crackdown on big banks’ illegal overdraft practices and urged state attorneys general to file more enforcement cases under federal law, according to the publication.
American Banker is a resource for senior executives in banking and financial services, keeping its users updated on vital developments and focusing sharply on their most important concerns — innovation, transformation, and disruption; technology, regulation, and reform, the site says.